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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT
PURSUANT TO SECTION 14(D)(4)
OF THE SECURITIES EXCHANGE ACT OF 1934
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CMP MEDIA INC.
(Name of Subject Company)
CMP MEDIA INC.
(Name of Person(s) Filing Statement)
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CLASS A COMMON STOCK,
PAR VALUE $0.01 PER SHARE
(Title of Class of Securities)
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125891101
(CUSIP Number of Class of Securities)
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ROBERT D. MARAFIOTI, ESQ.
EXECUTIVE VICE PRESIDENT,
SECRETARY AND GENERAL COUNSEL
CMP MEDIA INC.
600 COMMUNITY DRIVE
MANHASSET, NEW YORK 11030
(516) 562-5000
(Name, Address and Telephone Number of Person Authorized to
Receive Notice and Communications on Behalf of the Person(s) Filing Statement)
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COPY TO:
EDWARD J. O'CONNELL, ESQ.
DOW LOHNES & ALBERTSON, PLLC
1200 NEW HAMPSHIRE AVENUE, N.W.
SUITE 800
WASHINGTON, DC 20036
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ITEM 1. SECURITY AND SUBJECT COMPANY
The name of the subject company is CMP Media Inc., a Delaware corporation
(the "Company"), and the address of the principal executive offices of the
Company is 600 Community Drive, Manhasset, New York 11030. The title of the
class of equity securities to which this statement relates is the Class A Common
Stock, par value $0.01 per share, of the Company (the "Class A Common Stock").
ITEM 2. TENDER OFFER OF THE BIDDER
This statement relates to the cash tender offer (the "Offer") disclosed in
the Tender Offer Statement on Schedule 14D-1, dated May 6, 1999 (the "Schedule
14D-1"), and the Offer to Purchase filed as Exhibit (a)(1) thereto (the "Offer
to Purchase"), of MFW Acquisition Corp., a Delaware corporation ("Merger Sub")
and a wholly-owned subsidiary of MFW Acquisition Holdings Corp., a Delaware
corporation ("Parent"), which is a wholly-owned affiliate of Miller Freeman
Worldwide plc, an English public limited company ("MF Worldwide"), to purchase
all of the outstanding shares of the Company's Class A Common Stock and Class B
Common Stock, par value $0.01 per share (the "Class B Common Stock" and,
collectively with the Class A Common Stock, the "Company Common Stock") (the
"Shares") at a price of $39.00 per Share in cash, net to the seller (the "Offer
Price"), upon the terms and subject to the conditions set forth therein.
The Offer is being made by Merger Sub pursuant to the Agreement and Plan of
Merger, dated as of April 28, 1999 (the "Merger Agreement"), by and among the
Company, Merger Sub, MF Worldwide and United News & Media plc, an English public
limited company ("United") which is the parent company of MF Worldwide, Parent
and Merger Sub, and a copy of the Merger Agreement is filed as Exhibit 1 hereto
and incorporated herein by reference. Following satisfaction or waiver of
certain conditions and subject to certain terms set forth in the Merger
Agreement, Merger Sub will be merged with and into the Company (the "Merger"),
with the Company surviving the Merger (the "Surviving Corporation") as a
wholly-owned subsidiary of Parent. The Schedule 14D-1 states that the address of
the principal executive offices of Merger Sub and Parent is 32 Union Square
East, 5th Floor South, New York, New York 10003. A copy of the press release
issued jointly by United and the Company on April 29, 1999 is filed as Exhibit 8
hereto and incorporated herein by reference.
ITEM 3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person filing
this statement, are set forth in Item 1 above.
(b) Except as described or referred to below or in Annex A attached hereto,
which is incorporated herein by reference, to the knowledge of the Company,
there exists on the date hereof no material contract, agreement, arrangement or
understanding and no actual or potential conflict of interest between the
Company or its affiliates and (i) the Company, its executive officers, directors
or affiliates or (ii) Merger Sub or Parent, or the executive officers, directors
or affiliates of Merger Sub or Parent.
THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, which summary is
qualified in its entirety by reference to the Merger Agreement, a copy of which
is filed as Exhibit 1 hereto and incorporated herein by reference. (Capitalized
terms used but not defined herein have the same meanings as set forth in the
Merger Agreement.)
THE OFFER. The Merger Agreement provides that as promptly as reasonably
practicable after the date of execution of the Merger Agreement, but in no event
later than May 6, 1999, Merger Sub will commence the Offer for all of the
outstanding Shares at a price of not less than $39.00 per Share in cash, net to
the seller, subject to the satisfaction of conditions set forth below and,
subject only to the terms and conditions of the Offer, will pay, as promptly as
reasonably practicable, after expiration of the Offer for all Shares duly
tendered thereunder and not withdrawn. Merger Sub may waive any condition to the
Offer, increase
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the price per Share payable in the Offer and make any other changes in the terms
and conditions of the Offer. However, without the consent of the Company, no
change may be made which decreases the price per Share payable in the Offer or
changes the form of consideration payable in the Offer, which reduces the
maximum number of Shares to be purchased in the Offer or which imposes
conditions to the Offer other than those described below or which extends the
Offer (except as set forth in the following sentence). Notwithstanding the
foregoing, Merger Sub may, without the consent of the Company, (i) extend the
Offer beyond the scheduled expiration date (the initial scheduled expiration
date being 20 business days following the commencement of the Offer) if, at the
scheduled expiration date of the Offer, any of the conditions to Merger Sub's
obligation to accept for payment, and to pay for, the Shares shall not be
satisfied or waived, (ii) extend the Offer for an aggregate period of not more
than 10 business days if, immediately prior to the initial expiration date of
the Offer (as it may be extended), after giving effect to the automatic
conversion of all Class B Common Stock Shares validly tendered and not
withdrawn, the Class A Common Stock Shares validly tendered and not withdrawn
pursuant to the Offer equal less than 90% of the outstanding Class A Shares and
Merger Sub irrevocably expressly waives any condition (other than the Minimum
Condition (as defined below)) that subsequently may not be satisfied during such
extension of the Offer, or (iii) extend the Offer for any period required by any
rule, regulation or interpretation of the SEC or the staff thereof applicable to
the Offer.
CERTAIN CONDITIONS OF THE OFFER. Notwithstanding any other provision of the
Merger Agreement, Merger Sub shall not be required to accept for payment or pay
for any Shares tendered, and may terminate or amend the Offer (subject to the
provisions of the Merger Agreement) and may postpone the acceptance of, and
payment for, subject to Rule 14e-1 (c) of the Exchange Act, any Shares tendered,
(A) unless the following conditions shall have been satisfied: (i) there shall
be validly tendered and not withdrawn prior to the expiration of the Offer a
number of Shares which represent on a fully diluted basis (including for
purposes of such calculation all Shares issuable upon exercise of all vested
stock options and warrants and conversion of convertible securities or other
rights to purchase or acquire shares and after giving effect to the conversion
of the Class B Common Stock Shares) at least 51% of the number and voting power
of the Shares then outstanding (the "Minimum Condition") and (ii) any applicable
waiting period under the HSR Act shall have expired or been terminated prior to
the expiration of the Offer or (B) if at any time after the date of this
Agreement and before the time of payment for any such Shares (whether or not any
Shares theretofore have been accepted for payment or paid for pursuant to the
Offer) any of the following conditions exists:
(a) there shall be in effect an injunction or other order, decree, judgment
or ruling by a court of competent jurisdiction or by a governmental, regulatory
or administrative agency or commission of competent jurisdiction or a statute,
rule, regulation, executive order or other action or proceeding shall have been
promulgated, enacted, taken, initiated or instituted by a government or a
governmental authority or a governmental, regulatory or administrative agency or
commission of competent jurisdiction which in any such case (i) seeks to
restrain or prohibit the making or consummation of the Offer or the consummation
of the Merger, (ii) seeks to prohibit or restrict in any material respect the
ownership or operation by Merger Sub (or any of its affiliates or subsidiaries)
of any material portion of the Company's business or assets, or seeks to compel
Merger Sub (or any of its affiliates or subsidiaries) to dispose of or hold
separate any material portion of the Company's business or assets, (iii) seeks
to impose material limitations on the ability of Merger Sub effectively to
acquire or to hold or to exercise full rights of ownership of the Company Common
Stock, including, without limitation, the right to vote the Company Common Stock
purchased by Merger Sub on all matters properly presented to the stockholders of
the Company, or (iv) seeks to impose any material limitations on the ability of
Merger Sub or any of its affiliates or subsidiaries effectively to control in
any material respect the business and operations of the Company; or
(b) the Merger Agreement shall have been terminated by the Company, Merger
Sub or MF Worldwide in accordance with its terms; or
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(c) there shall have occurred and be continuing (i) any general suspension
of, or limitation on prices for, trading in securities on any national
securities exchange or the over-the-counter market, (ii) a declaration of a
banking moratorium or any suspension of payments in respect of banks in the
United States, (iii) any limitation (whether or not mandatory) by any government
or governmental entity of the United States on the extension of credit by banks
or other lending institutions, or (iv) in the case of any of the foregoing
existing at the time of the execution of the Merger Agreement, a material
acceleration or worsening thereof; or
(d) (i) the Board of Directors or any committee thereof shall have
withdrawn, materially modified or changed in a manner adverse to MF Worldwide or
Merger Sub the approval or recommendation of the Offer, the Merger or the Merger
Agreement, or approved or recommended any Acquisition Transaction (as defined
below) or any other acquisition of Company Common Stock other than the Offer or
the Merger, or (ii) the Board of Directors or any committee thereof shall have
resolved to do any of the foregoing; or
(e) the representations and warranties of the Company shall not be true and
correct as of the date of the Merger Agreement or as of the expiration of the
Offer except where failure to be so true and correct would not (in the aggregate
for all representations and warranties of the Company) have a Material Adverse
Effect (as defined below) (other than representations and warranties that are
already so qualified, which in each such case shall be true and correct as
written), and except for (i) changes specifically contemplated by the Merger
Agreement and (ii) those representations and warranties that address matters
only as of a particular date (which shall remain true and correct as of such
date); or
(f) the Company shall have failed to perform any obligation or to comply
with any agreement or covenant of the Company to be performed or complied with
by it under the Merger Agreement unless all such failures together in their
entirety, would not, individually or in the aggregate, have a Material Adverse
Effect; or
(g) the Company shall not have delivered to MF Worldwide binding agreements
signed by the holders of Options (as defined below) representing at least 95% of
the Shares issuable upon exercise of all of the outstanding Options, agreeing to
the cancellation of the Options of such holders on the terms described in
Section 3.1(d) of the Merger Agreement; or
(h) the Company shall not have delivered to MF Worldwide evidence of binding
agreements of the executive officers of the Company to make payment in full
within five business days after the closing of the Offer of all amounts of
principal and accrued interest, whether or not then due and owing, under all
credit, loan or similar agreements as to which the Company is a lender to or
guarantor of such executive officers; or
(i) there shall since March 31, 1999 have occurred any event that,
individually or when considered together with any other matter, has had or would
have a Material Adverse Effect; or
(j) Merger Sub and the Company shall have agreed that Merger Sub shall amend
the Offer to terminate the Offer or postpone the payment for Company Common
Stock pursuant thereto.
As used in the Merger Agreement, "Material Adverse Effect" means any change,
effect, event or occurrence that has, or would have, individually or in the
aggregate, a material adverse impact on the business, assets, liabilities,
results of operations or financial condition of such party and its subsidiaries
taken as a whole; provided, however, that "Material Adverse Effect" shall be
deemed to exclude (i) changes in general economic conditions or changes
affecting the industries generally in which such party operates, (ii) changes in
trading prices for such party's capital stock, (iii) stockholder litigation
arising from allegations of a breach of fiduciary duty relating to the Merger
Agreement and (iv) the impact of changes in GAAP.
The foregoing conditions are for the sole benefit of Merger Sub and may be
asserted by Merger Sub regardless of the circumstances giving rise to any such
condition or may be waived by Merger Sub in whole or in part at any time and
from time to time in its sole discretion, subject in each case to the terms of
the
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Merger Agreement. The failure by Merger Sub at any time to execute any of the
foregoing rights shall not be deemed a waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
THE MERGER. The Merger Agreement provides that, subject to the terms and
conditions thereof, at the Effective Time, Merger Sub will be merged with and
into the Company and the separate corporate existence of Merger Sub will cease
(the "Merger"). At the Effective Time, by virtue of the Merger and without any
action on the part of Merger Sub, the Company or the holders of Shares, each
Share issued and outstanding immediately prior to the Effective Time (other than
Shares owned by Merger Sub, Shares owned by the Company (which shall not include
any Shares held by the trust established pursuant to the 1999 Leeds Family/CMP
Media Inc. Employee Benefit Trust Agreement) or any direct or indirect wholly-
owned subsidiary of the Company and Shares that are outstanding immediately
prior to the Effective Time and which are held by stockholders who shall have
not voted in favor of the Merger or consented thereto in writing and who shall
have demanded properly in writing appraisal for such Shares in accordance with
Section 262 of the Delaware General Corporation Law (the "DGCL")) will be
converted into the right to receive $39.00 per Share (the "Cash Price").
Pursuant to the Merger Agreement, each share of common stock, par value $.01 per
share, of Merger Sub issued and outstanding immediately prior to the Effective
Time will be converted into and exchanged for one validly issued, fully paid and
nonassessable share of common stock of the Surviving Corporation.
CHARTER DOCUMENTS; INITIAL DIRECTORS AND OFFICERS. The Certificate of
Incorporation and By-laws of Merger Sub in effect at the Effective Time shall be
the Certificate of Incorporation of the Surviving Corporation, until duly
amended in accordance with the terms thereof and the DGCL, provided, that the
Certificate of Incorporation and By-laws of the Surviving Corporation will (i)
state that the name of the Surviving Corporation is "CMP Media Inc." and (ii)
for a period of at least six years after the Effective Time, include
indemnification and exculpation provisions which are at least as favorable to
the current officers and directors of the Company as those contained in the
Certificate of Incorporation and By-laws of the Company as of the date of the
Merger Agreement.
NO SOLICITATION. The Company will not, prior to the Effective Time,
directly or indirectly, solicit, initiate or encourage any inquiries or the
making of any proposal with respect to any merger, consolidation or other
business combination involving the Company or its subsidiaries or acquisition of
all or substantially all of the assets or capital stock of the Company and its
subsidiaries taken as a whole (an "Acquisition Transaction") or negotiate,
explore or otherwise engage in substantive discussions with any person (other
than MF Worldwide, Merger Sub or their respective directors, officers,
employees, agents and representatives) with respect to any Acquisition
Transaction or enter into any agreement, arrangement or understanding requiring
it to abandon, terminate or fail to consummate the Merger or any other
transactions contemplated by the Merger Agreement.
DIRECTORS. Promptly upon the purchase by Merger Sub of Shares pursuant to
the Offer, and from time to time thereafter as Shares are acquired by Merger
Sub, Merger Sub shall be entitled to designate such number of directors, rounded
up to the next whole number, on the Company's Board of Directors as will give
Merger Sub, subject to compliance with Section 14(f) of the Exchange Act,
representation on the Board of Directors equal to at least that number of
directors which equals the product of the total number of directors on the Board
of Directors (giving effect to the directors appointed or elected pursuant to
this sentence) multiplied by the percentage obtained by dividing (i) the
aggregate number of votes represented by the Shares beneficially owned by Merger
Sub or any affiliate of Merger Sub by (ii) the number of votes represented by
all Shares outstanding (excluding Shares held by the Company but not excluding
any Shares held by the trust established pursuant to the 1999 Leeds Family/CMP
Media Inc. Employee Benefit Trust Agreement). At such times, if requested by
Merger Sub, the Company will also cause each committee of the Board of Directors
to include persons designated by Merger Sub constituting the same percentage of
each such committee as Merger Sub's designees are of the Board of Directors. The
Company shall, upon
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request by Merger Sub, promptly increase the size of the Board of Directors or
exercise its best efforts to secure the resignations of such number of directors
as is necessary to enable Merger Sub's designees to be elected to the Board of
Directors and shall cause Merger Sub's designees to be so elected; provided,
however, that prior to the Effective Time, the Company's Board of Directors
shall always have at least three members who are neither officers, directors,
stockholders or designees of MF Worldwide or Merger Sub or any of their
affiliates ("Outside Directors"). If the number of directors who are Outside
Directors is reduced below three for any reason prior to the Effective Time, the
remaining directors who are Outside Directors (or, if there is only one director
who is an Outside Director, such Outside Director) shall be entitled to
designate a person (or persons) to fill such vacancy (or vacancies) who is an
Outside Director and who shall be a director deemed to be an Outside Director
for all purposes of the Merger Agreement.
DIRECTORS' AND OFFICERS' INDEMNIFICATION. The Merger Agreement provides
that, from and after the Effective Time, MF Worldwide shall cause the Surviving
Corporation to fulfill and honor in all respects the obligations of the Company
pursuant to certain existing indemnification agreements of the Company in favor
of the directors and officers of the Company. Also pursuant to the Merger
Agreement, for a period of six years after the Effective Time, MF Worldwide
shall cause the Surviving Corporation to use its commercially reasonable efforts
to maintain in effect, if available, directors' and officers' liability
insurance and employed lawyers professional liability insurance covering those
persons who are currently or at the Effective Time covered by the Company's
policies for such insurance on terms comparable to those applicable to the
current policies for such insurance; provided, however, that in no event shall
MF Worldwide or the Surviving Corporation be required to expend in excess of
200% of the annual premium currently paid by the Company for such coverage (or
obtain coverage in excess of the coverage that is available for such 200% of
such annual premium).
COMPANY OPTIONS. The Merger Agreement provides that, with respect to all
outstanding options or warrants (referred to collectively as the "Options" and
individually as an "Option") to purchase to acquire Shares (except for any
vested or unvested Options held by Michael S. Leeds or Daniel H. Leeds, which
shall be canceled prior to the expiration date of the Offer without payment
therefor except as provided in their respective employment agreements), each
holder of an Option which is surrendered by the holder for cancellation shall be
entitled to receive from the Company, immediately prior to the closing of the
Offer, for each Share purchasable under each Option, an amount in cash in full
cancellation of such Option equal to the excess of the Cash Price over the per
share exercise price of such Option (or such greater amount as Merger Sub shall
agree in writing), as such amount may be reduced by any required withholding in
accordance with applicable tax laws. The Company agrees to use all commercially
reasonable efforts to obtain prior to the expiration date of the Offer written
agreements of all holders of Options legally binding such holders to
cancellation of such Options consistent with the foregoing.
MATERIAL TRANSACTIONS. The Merger Agreement provides that, prior to the
Merger, the Company will not (other than as required pursuant to the terms of
the Merger Agreement and the related documents) without first obtaining the
written consent of MF Worldwide, enter into any transactions outside of the
ordinary course of business of the Company or:
(a) encumber any asset or enter into any transaction or make any contract or
commitment relating to the properties, assets and business of the Company or any
subsidiary, other than in the ordinary course of business or as otherwise
disclosed in the Merger Agreement;
(b) enter into any employment contract which is not terminable at will or
upon notice of 30 days or less and without penalty to the Company or any
subsidiary except as provided in the Merger Agreement;
(c) issue or sell, or agree to issue or sell, any shares of capital stock or
other securities of the Company, except upon exercise of currently outstanding
stock options or warrants;
(d) except as set forth in the Merger Agreement or as may be required to
comply with applicable law, become obligated under any new pension plan, welfare
plan, multi-employer plan, employee benefit plan, severance plan, benefit
arrangement or similar plan or arrangement which is not in existence on the date
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hereof, or amend any such plan or arrangement in existence on the date hereof if
such amendment would have the effect of materially increasing the costs thereof
to the Company or any of its affiliates;
(e) declare, set aside or pay any dividend or other distribution (whether in
cash, securities or property or any combination thereof) in respect of any class
or series of its capital stock other than between the Company and any of its
wholly-owned subsidiaries;
(f) split, combine, subdivide, reclassify or redeem, purchase or otherwise
acquire, or propose to redeem, purchase or otherwise acquire, any shares of its
capital stock, or any of its other securities;
(g) (i) incur, assume or pre-pay any long-term debt or incur or assume any
short-term debt, except that the Company and the Company Subsidiaries may incur,
assume or pre-pay debt in the ordinary course of business consistent with past
practice under existing lines of credit, (ii) assume, guarantee, endorse or
otherwise become liable or responsible (whether directly, contingently or
otherwise) for the obligations of any other person or entity except in the
ordinary course of business, or (iii) make any loans, advances or capital
contributions to, or investments in, any other person or entity except in the
ordinary course of business and except for loans, advances or capital
contributions to or investments in any wholly-owned subsidiary of the Company;
(h) issue any stock option under any Plan or any other options, warrants,
convertible securities or other capital stock, and (except as contemplated by
Section 3.1(d) of the Merger Agreement) will not accelerate the vesting or
otherwise modify the terms of any option outstanding under any Plan;
(i) take any action to institute any severance or termination pay practices
with respect to any directors, officers, or employees of the Company or any
subsidiaries other than those in effect on the date hereof, or to increase the
benefits payable under its severance or termination pay practices in effect on
the date hereof;
(j) adopt or amend, in any material respect, except as may be required by
applicable law or regulation, any collective bargaining, bonus, profit sharing,
compensation, stock option, restricted stock, pension, retirement, deferred
compensation, employment or other employee benefit plan, agreement, trust, fund,
plan or arrangement for the benefit or welfare of any directors, officers or
employees of the Company, or any subsidiaries, or make any increase in the
salaries, compensation or pay scales of any such directors, officers or
employees; or
(k) amend its certificate of incorporation or bylaws.
The Company will permit two designated representatives of MF Worldwide to be
present on a full-time basis at the principal offices of the Company to observe
the conduct of the business of the Company, and the Company will consult with
such representatives prior to taking any actions outside the ordinary course of
the Company's business in any material respect or any actions specified above.
CONDITIONS TO THE OBLIGATIONS OF EACH PARTY. The Merger Agreement provides
that the respective obligations of each party to consummate the Merger are
subject to the satisfaction of a number of conditions, including, but not
limited to, the following conditions (any of which may be waived in writing by
MF Worldwide and the Company):
(a) None of MF Worldwide, Merger Sub or the Company, nor any of their
respective subsidiaries, shall be subject to any order, decree or injunction by
a court of competent jurisdiction which (i) prevents or materially delays the
consummation of the Merger or (ii) would impose any material limitation on the
ability of MF Worldwide effectively to exercise full rights of ownership of the
common stock of the Surviving Corporation or any material portion of the assets
or business of the Company and its subsidiaries taken as a whole.
(b) No statute, rule, regulation, executive order, decree, injunction or
other order (whether temporary, preliminary or permanent) shall have been
enacted by the government (or any governmental agency) of the United States or
any other country, or any state, municipality or other political subdivision
thereof, that makes the consummation of the Merger and any other transaction
contemplated hereby illegal. All
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waiting periods, if any, under the HSR Act relating to the transactions
contemplated hereby shall have expired or terminated early and all material
foreign antitrust approvals required to be obtained prior to the Merger in
connection with the transactions contemplated hereby shall have been obtained.
(c) The requisite holders of Shares shall have approved the adoption of the
Merger Agreement and any other matters submitted to them to the extent required
by, and in accordance with the provisions of, the Merger Agreement.
REPRESENTATIONS AND WARRANTIES. The Merger Agreement contains various
customary representations and warranties of the parties thereto including, but
not limited to, representations by the Company as to corporate organization and
qualification, subsidiaries, capitalization, authority to enter into the Merger
Agreement, filings with the SEC and other governmental authorities, the absence
of certain changes or events, intellectual property, material contracts,
environmental matters, employee benefit matters, the opinion of the Company's
financial advisor, tax returns, audits, brokers and litigation.
GUARANTY BY UNITED. The Merger Agreement includes an unconditional and
irrevocable guaranty by United to the Company of the due and punctual payment
for all Shares in connection with the Offer and the Merger and any other
monetary obligations of MF Worldwide or Merger Sub and the due and punctual
performance of all other obligations of MF Worldwide or Merger Sub to the
Company, all in accordance with the terms of the Merger Agreement.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be terminated
and canceled, and the Offer and the Merger may be abandoned at any time prior to
the Effective Time:
(a) by mutual consent of Merger Sub and the Company;
(b) by either MF Worldwide or the Company if, upon a vote at a duly held
meeting of stockholders or any adjournment thereof, any required approval of the
holders of Shares shall not have been obtained;
(c) by either MF Worldwide or the Company if the Merger shall not have been
consummated on or before October 28, 1999, unless the failure to consummate the
Merger is the result of a willful and material breach of the Merger Agreement by
the party seeking to terminate the Merger Agreement;
(d) by either MF Worldwide or the Company if any court of competent
jurisdiction or other governmental entity shall have issued an order or ruling
or taken any other action permanently enjoining, restraining or otherwise
prohibiting the Merger, and such order, decree, ruling or other action shall
have become final and nonappealable;
(e) by either MF Worldwide or the Company in the event of a breach by the
other party of any representation, warranty, covenant or other agreement
contained in the Merger Agreement which (i) would give rise to the failure of a
condition set forth in the Merger Agreement and (ii) cannot be or has not been
cured within 30 days after the giving of written notice to the breaching party
of such breach (a "Material Breach"); provided that the terminating party is not
then in Material Breach of any representation, warranty, covenant or agreement
contained in the Merger Agreement;
(f) by either MF Worldwide or the Company if Merger Sub shall have
terminated the Offer in accordance with its terms and conditions, and otherwise
not in violation of the Merger Agreement, without purchasing any Shares pursuant
thereto;
(g) by either MF Worldwide or the Company in the event that (i) all of the
mutual conditions to the obligation of such party to effect the Merger set forth
in the Merger Agreement shall have been satisfied and (ii) any separate
condition to the obligation of such party to effect the Merger set forth in the
Merger Agreement is not capable of being satisfied prior to October 28, 1999; or
(h) by MF Worldwide, if the Company's Board of Directors shall have (i)
determined to withdraw its recommendation of the Offer or the Merger to the
holders of Shares or (ii) approved, recommended or endorsed any Acquisition
Transaction other than the Merger Agreement or (iii) resolved to do any of the
foregoing.
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EXPENSES. All expenses incurred in connection with the Merger Agreement and
the transactions contemplated by the Merger Agreement will be paid by the party
incurring such expenses, whether or not any transaction contemplated by the
Merger Agreement is consummated.
TENDER AND VOTING AGREEMENT
In connection with the execution of the Merger Agreement, Merger Sub entered
into a Tender and Voting Agreement, dated as of April 28, 1999 (the "Tender and
Voting Agreement"), with the holders of all of the outstanding Class B Common
Stock. Pursuant to the Tender and Voting Agreement, such holders have agreed,
among other things, to tender all such Shares pursuant to the Offer, and not
withdraw such Shares as long as the Tender and Voting Agreement remains in
effect, and to vote such Shares in favor of the adoption of the Merger Agreement
and the transactions contemplated therein, against any Acquisition Transaction
and against any action which would result in any of the conditions of the
Company's obligations under the Merger Agreement not being fulfilled. The Tender
and Voting Agreement also includes covenants by such stockholders to neither
dispose of their Shares, enter into a voting arrangement with respect to their
Shares, nor grant any proxy with respect to their Shares.
AMENDMENTS TO OPTION AGREEMENTS, STOCKHOLDERS' AGREEMENTS AND EMPLOYMENT
AGREEMENTS
Each of Michael S. Leeds, Daniel H. Leeds and Kenneth D. Cron entered into
an agreement with the Company as of April 23, 1999 (each, an "Amendment
Agreement") providing for certain amendments to his existing option agreement
and employment agreement with the Company (and, in the case of Michael Leeds and
Daniel Leeds, to their respective stockholders' agreements which govern their
restricted shares of Class A Common Stock). Under their respective Amendment
Agreements, each of Michael Leeds and Daniel Leeds agreed that his option
agreement would be terminated in the event that the Company consummated a
transaction resulting in a change of control of the Company on or before March
1, 2000, and that all options issuable to him under such option agreement would
thereupon be canceled. In consideration of the termination of the option
agreements of Michael Leeds and Daniel Leeds, the Company agreed, in the event
of a change of control, to terminate their respective stockholders' agreements
and to amend certain provisions of their respective employment agreements in
order to modify the scope of certain restrictive covenants and to eliminate the
Company's right to reduce its severance payments to each executive by 50% of
cash compensation earned by such executive from other employment after
termination of his employment with the Company. Under the Amendment Agreement
with Mr. Cron, his option agreement was amended to provide that, upon a change
of control of the Company, all of Mr. Cron's unvested options to purchase Class
A Common Stock would immediately vest and become exercisable. No changes were
made to Mr. Cron's stockholders' agreement or employment agreement with the
Company.
RETENTION BONUSES
The Company adopted the CMP Media Inc. Retention Bonus Plan (the "Retention
Plan") effective March 1, 1999, pursuant to which a committee appointed by the
Board of Directors of the Company has the discretion to award bonuses to
employees who remain employed with the Company through a period specified by the
committee (the "Retention Period"). The committee may define the amount of a
Retention Plan bonus as a fixed dollar amount or as a formula. If an employee
who receives a Retention Plan award is terminated by the Company for cause, as
defined in the Retention Plan, or resigns voluntarily without good reason, as
defined in the Retention Plan, prior to the expiration of his or her Retention
Period, he or she forfeits the Retention Plan bonus.
SEVERANCE PAY
The Company has adopted the CMP Media Inc. Severance Pay Plan (the
"Severance Plan"), which will become effective upon the closing of a transaction
resulting in a change of control of the Company.
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The Severance Pay Plan provides benefits to every employee of the Company who is
not a party to a separate written agreement with the Company which provides
severance-type benefits (unless such agreement confirms that he or she is
eligible to receive benefits under the Severance Plan as well). If an eligible
employee is terminated by the Company without cause, as defined in the Severance
Plan, or resigns for good reason, as defined in the Severance Plan, within one
year after the closing date of such a transaction, he or she is entitled to two
weeks of pay for each full year of service with the Company, although a
committee appointed by the Board of Directors may award benefits in excess of
that amount. The minimum benefit is 8 weeks of pay and the maximum benefit is
104 weeks of pay. The Company is also required to pay a share of such employee's
COBRA premiums through the severance period (if the employee elects to receive
healthcare insurance coverage under COBRA) and to provide outplacement services
for the employee's benefit.
OTHER EXECUTIVE AGREEMENTS
The Company entered into agreements with five of its executive officers as
of March 1, 1999, which agreements provide that, in the event of a change of
control, the Company will pay each executive a bonus under the Retention Plan
(provided the executive remains with the Company through the change of control
and does not resign without good reason, as defined in such agreements, for 90
days thereafter) and all of the executive's unvested options to purchase Class A
Common Stock will immediately vest and become exercisable on the date of such
change of control. Such agreements also provide that, if the executive is
dismissed by the Company without cause (as defined in such agreements) or
resigns for good reason (as defined in such agreements) within eighteen months
after a change of control, the executive is entitled to extended severance
benefits under the Severance Plan provided that he or she does not compete with
the Company during the severance period. In addition, the Company has the right
to reduce its severance payments by 50% of any cash compensation that the
executive receives from other employment during that period.
The Company also entered into agreements with four of its other executive
officers as of March 1, 1999, which agreements required them to perform services
in connection with the Company's exploration of strategic alternatives as well
as their regular duties and, for a period of three years following a change of
control of the Company, to render services to the Company in their current
capacities and comply with certain restrictive covenants not to compete with the
Company, to solicit its employees, to interfere in its customer or supplier
relationships or to disclose its confidential information. Such agreements also
provide that, in the event of a change of control, the Company will pay each
executive a bonus (provided the executive remains with the Company through the
change of control and does not resign without good reason, as defined in such
agreement, for 90 days thereafter) and all of the executive's unvested options
to purchase Class A Common Stock will immediately vest and become exercisable on
the date of such change of control. The aggregate amount of the projected
bonuses to the nine executives who are parties to the above-described agreements
is approximately $17,375,000.
In the event the benefits received by any of the four above-mentioned
executives under such agreements are subject to an excise tax as an "excess
parachute payment", the Company will pay the executive a gross-up bonus to
offset the effect of such excise tax. If, following a change of control, any of
the four executives' employment is terminated by the Company without cause (as
defined in such agreement), or if an executive terminates employment with good
reason (as defined in such agreement), the executive remains subject to the
above-described restrictive covenants but is entitled to receive base salary and
incentive bonus compensation for the duration of the restricted period (reduced
by 50% of any cash compensation earned from other employment). The agreements
provide substantially similar benefits in the event the executive resigns,
without good reason, more than one year after the change of control. If an
executive resigns prior to the first anniversary of the change of control or is
terminated for cause, he is not entitled to any continued payments or benefits
under the agreements, but remains subject to the restrictive covenants.
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OTHER ARRANGEMENTS
In addition, certain directors, officers and employees of the Company may be
deemed to have interests in the transactions contemplated by the Merger
Agreement that are in addition to their interests as stockholders of the Company
generally, including, as mentioned above, employment agreements for senior
management of the Company and the right to indemnification after the
consummation of the Merger and to receive officers' and directors' liability
insurance coverage, subject to the terms of the Merger Agreement as described
above under "The Merger Agreement--Directors' and Officers' Indemnification".
ITEM 4. THE SOLICITATION OR RECOMMENDATION
(a) RECOMMENDATION. On April 28, 1999, the Board of Directors of the
Company unanimously approved the Merger Agreement, the Tender and Voting
Agreement and the transactions contemplated thereby and determined that the
terms of the Offer and the Merger as set forth in the Merger Agreement are fair
to, and in the best interests of, the Company's stockholders. For the reasons
set forth below, the Board of Directors unanimously recommends that stockholders
accept the Offer and tender their Shares pursuant to the Offer and, if a meeting
of the Company's stockholders is required to be called and held in accordance
with applicable law, recommends that the Company's stockholders approve the
Merger Agreement and the transactions contemplated thereby, including the
Merger.
(b) BACKGROUND OF AND REASONS FOR THE RECOMMENDATION. Beginning in December
1998, the Executive Committee of the Company's Board of Directors, in
consultation with other members of the Company's Board of Directors and senior
management of the Company, began the process of considering the exploration of
various strategic alternatives for the Company, including but not limited to a
sale or merger of the Company, in order to maximize stockholder value and expand
the Company's ability to provide new products and services to its customers. On
December 17, 1998, representatives of Lazard Freres & Co. LLC ("Lazard Freres"),
which previously had served as a financial advisor to the Company, made a
presentation to the Executive Committee and certain members of the Company's
senior management regarding strategic alternatives for the Company. At that
point, the range of possible transactions considered included the restructuring
of parts of the Company's businesses, an acquisition or joint venture with
respect to one or more of the Company's publication groups, or an outright
acquisition of the Company. On December 24, 1999, representatives of Lazard
Freres and the Company held a conference call in order to start gathering
information regarding the Company in connection with the possible exploration of
strategic alternatives.
On January 7, 1999, the members of the Executive Committee, together with
certain members of the Company's senior management, met with representatives of
Lazard Freres and Dow, Lohnes & Albertson, PLLC, the Company's legal counsel
("DL&A"), to discuss possible strategic alternatives and the process by which
the Company could solicit expressions of interest from potential strategic and
financial parties. Lazard Freres' engagement to act as financial advisor to the
Company in connection with this exploration of strategic alternatives, and to
conduct an organized marketing process in that connection, was formally
evidenced by an engagement agreement with the Company entered into as of January
25, 1999. At a meeting of the Board of Directors on February 9, 1999, the
Company's Board of Directors gave final approval to the Company's exploration of
strategic alternatives.
On February 10, 1999, the Company issued a press release announcing the
retention of Lazard Freres and the Company's decision to explore strategic
alternatives, including but not limited to a sale or merger. As part of the
process of exploring the Company's strategic options, the Company's senior
management had prepared in late January 1999 and early February 1999, in
conjunction with Lazard Freres, a collection of evaluation materials for
distribution on a confidential basis to potentially interested parties. Between
February 10, 1999 and March 3, 1999, Lazard Freres contacted a total of 75
parties, including strategic and financial buyers, that Lazard Freres and the
Company believed would be most likely to have a potential interest in the
Company. Of these parties, 37 requested additional information and were sent the
confidential evaluation materials concerning the Company. During this period,
representatives of Lazard
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Freres and DL&A entered into negotiation of confidentiality agreements with
parties interested in receiving evaluation materials on the Company. As part of
this process, the Company and United entered into a confidentiality agreement on
February 19, 1999 with respect to the evaluation materials. The Company and
Lazard Freres also held a number of meetings in February 1999 and March 1999 in
order to prepare for management presentations and to gather data room
information that would be made available to the selected potential buyers.
On February 26, 1999, Lazard Freres sent a letter to interested parties
requiring non-binding preliminary indications of interest by March 16, 1999. Of
the parties that received the confidential evaluation materials, a number of
parties (including United) expressed interest in pursuing a transaction with the
Company and made non-binding preliminary indications of interest on March 16,
1999. On March 17, 1999, after consultation with the Company, representatives of
Lazard Freres contacted certain of these parties (including United) in order to
inform them that they were invited to proceed with due diligence and to schedule
a time for management presentations by the Company. Arrangements were also made
for the selected parties to obtain access to the Company's data room for their
review of due diligence materials.
From March 23, 1999 to April 2, 1999, the selected parties (including
United) were given presentations by the Company's management and visited the
data room. A number of follow up meetings and conference calls were organized
between representatives of the Company and the interested parties in order to
enable the selected parties to complete their due diligence. On April 12, 1999,
Lazard Freres informed the selected parties that final and binding "last and
best" offers for the Company were due by April 26, 1999.
After the delivery of proposals by the remaining interested parties on April
26, 1999, the Executive Committee consulted with its financial and legal
advisors on April 26, 1999 regarding the status and terms of the proposals
delivered and determined, with the knowledge and approval of the other members
of the Board of Directors, to commence negotiations with representatives of
United and MF Worldwide, which had proposed to make a cash tender offer for all
shares of the Company's Common Stock at $39.00 per share, to be followed by a
merger of Merger Sub and the Company. The Company's financial and legal advisors
met with the financial and legal advisors to United and MF Worldwide on April
27, 1999 to discuss various aspects of the MF Worldwide proposal and issues
relating thereto under the proposed form of Merger Agreement. Among other issues
discussed was the requirement by MF Worldwide that the holders of the Company's
Class B Common Stock (comprised of members of the Leeds Family and certain
controlled trusts and private foundations) enter into the Tender and Voting
Agreement.
All of the members of the Board of Directors of the Company met on April 27,
1999 to discuss the proposals received from the interested parties and, in
particular, the proposal of United and MF Worldwide. DL&A, the Company's legal
advisors, made a presentation to the Board of Directors regarding the terms of
the Merger Agreement and the Tender and Voting Agreement and the Board of
Directors' fiduciary duties in evaluating the transaction. Thereafter, Lazard
Freres made a presentation to the Board of Directors reviewing the process that
led to the proposed offer from United and MF Worldwide, an overview of the
financial terms of such proposed offer and the offers received from other
parties, a summary of the recent performance of the Company and a valuation
summary relating to the Company. On the basis of the material presented, Lazard
Freres indicated that it was prepared to deliver an opinion to the Board of
Directors to the effect that, based upon and subject to the assumptions and
other matters set forth therein, the $39.00 per share cash consideration
proposed to be paid to the Company's stockholders in connection with the Offer
and the Merger was fair to the stockholders of the Company from a financial
point of view (which was subsequently confirmed by Lazard Freres' delivery of a
written opinion dated April 28, 1999 to the Board of Directors). After
discussing the matters referred to above, the members of the Board of Directors
resolved to recess their meeting and to take up the discussion of these matters
the following day.
At the subsequent resumption of the meeting of all of the members of the
Board of Directors on April 28, 1999, the Board of Directors continued its
consideration of the Offer and the Merger. After
11
<PAGE>
discussion, the independent members of the Board of Directors (Richard W.
Anderson and Sharon Lee Patrick) indicated that they approved the forms of the
Merger Agreement and the Tender and Voting Agreement and the consummation of the
transactions contemplated thereby. Thereafter, the full Board of Directors
unanimously (i) determined that the Merger Agreement and the transactions
contemplated thereby, including the Offer and the Tender and Voting Agreement,
are fair to, and in the best interests of, the Company and its stockholders,
(ii) approved the Merger Agreement and the Tender and Voting Agreement and the
transactions contemplated thereby (and exempted Merger Sub from the application
of Section 203 of the DGCL), and (iii) resolved to recommend that the Company's
stockholders accept the Offer and tender their Shares into the Offer and approve
and adopt the Merger Agreement and the transactions contemplated thereby.
The Merger Agreement and Tender and Voting Agreement were executed as of
April 28, 1999, and the Company and United issued a joint press release on April
29, 1999 announcing the execution of the agreements.
In reaching its conclusion to approve the Merger Agreement and the
transactions contemplated thereby (including the Offer and the Merger), and to
recommend that the stockholders tender their Shares pursuant to the Offer, the
Board of Directors reviewed in detail the Merger Agreement, the Offer and the
Merger, together with various alternative transactions reviewed by management
and the Company's financial advisors, and deliberated extensively with its legal
and financial advisors regarding the foregoing. In reaching its unanimous
determination that the Merger Agreement, the Offer and the Merger are fair to,
and in the best interests of, the Company and its stockholders, the Board of
Directors took into consideration a number of factors including, among other
things, the following:
1. The familiarity of the Board of Directors with the Company's business,
financial condition, results of operations, properties and prospects as
an independent entity, the nature of the industry in which it operates
and presentations relating thereto by the Company's management.
2. The results of the process undertaken by Lazard Freres to identify and
solicit third party indications of interest in the Company and the nature
of contacts and proposals received from other parties.
3. The belief of the Board of Directors, based on the advice and analysis
of Lazard Freres presented to the Board at its meetings beginning on
April 27, 1999, that alternative transactions were not likely to provide
values to the stockholders of the Company superior to the terms of the
Offer and the Merger.
4. The presentations of Lazard Freres as to various financial matters and
the opinion of Lazard Freres to the effect that, as of April 28, 1999 and
based upon and subject to the assumptions and other matters set forth in
the opinion, the consideration to be received by the stockholders of the
Company in the Offer and the Merger is fair, from a financial point of
view, to such stockholders. The full text of the opinion of Lazard Freres
is attached hereto as Annex B and is incorporated herein by reference.
STOCKHOLDERS ARE URGED TO CAREFULLY READ THE OPINION OF LAZARD FRERES IN
ITS ENTIRETY.
5. The terms and conditions of the Merger Agreement, including, among other
things, the structural features of the Offer, which provide for a prompt
cash tender offer for all outstanding Shares to be followed, if certain
conditions are satisfied, by the Merger (thereby enabling the
stockholders to obtain the benefits of the transaction at the earliest
possible time). See "Item 3. The Merger Agreement."
6. The terms and conditions of the Tender and Voting Agreement. See "Item
3. The Tender and Voting Agreement."
7. The belief of the Board of Directors, based on the advice and analysis
of counsel to the Company, that the terms of the Offer and the Merger
were less likely to result in antitrust regulatory delays than
alternative transactions.
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8. The historical trading prices of the Shares and the premium represented
by the offer price of $39.00 per share.
In light of the number and variety of factors that the Board of Directors
considered in connection with its evaluation of the Offer and the Merger, the
Board of Directors did not find it practicable to quantify or otherwise assign
relative weights to any of the foregoing factors and, accordingly, the Board of
Directors did not do so, although individual members of the Board of Directors
may have given different weights to different factors.
ITEM 5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Company retained Lazard Freres on an exclusive basis to act as financial
advisor to the Company in connection with exploring potential strategic
alternatives and the implementation thereof, including, without limitation, a
recapitalization, acquisition, joint venture, divestiture, sale of all or a
substantial portion of the stock or assets of the Company (a "Transaction"). As
set forth in an engagement agreement, dated as of January 25, 1999, between
Lazard Freres and the Company, the Company agreed to pay Lazard Freres, in
consideration of its services, (i) a retainer fee of $250,000 (which fee was
paid) and (ii) a fee equal to approximately $19.3 million (against which the
Company would receive full credit for the retainer fee paid pursuant to clause
(i) above), which fee will be payable on the earlier of the acquisition by a
buyer of beneficial ownership of a majority of the Company's stock and
consummation of a Transaction. The Company also agreed to reimburse Lazard
Freres for reasonable travel and other out-of-pocket expenses, including the
reasonable fees and disbursements of its legal counsel, and to indemnify Lazard
Freres and certain related parties against certain liabilities arising out of
Lazard Freres' retention by the Company. In addition, Lazard Freres has in the
past provided financial advisory services to the Company and has received usual
and customary compensation for such services.
Neither the Company nor any person acting on its behalf has employed,
retained or compensated any other person to make solicitations or
recommendations to stockholders on its behalf concerning the Offer or the
Merger.
ITEM 6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) Other than the execution and delivery of the Tender and Voting Agreement
as described above pursuant to which certain stockholders of the Company have
agreed to take or to refrain from taking certain actions, including without
limitation, to tender such stockholders' Shares and not to withdraw any Shares
so tendered and to vote in favor of the Merger Agreement (see "Item 3. Identity
and Background" above), during the past sixty (60) days, no transactions in the
Shares have been effected by the Company or, to the best of the Company's
knowledge, by any executive officer, director, affiliate or subsidiary of the
Company, except for the following:
1. Between April 2, 1999 and April 27, 1999, the Gerard G. Leeds Lifetime
Trust, the Liselotte J. Leeds Lifetime Trust, Michael S. Leeds, Richard
A. Leeds, Daniel H. Leeds, Greg Jobin-Leeds and Jennifer Leeds gave the
following respective numbers of shares of Class A Common Stock to certain
charitable entities and private foundations (after causing certain of
such shares of Class A Common Stock to be converted from Class B Common
Stock): 1,667,230, 1,672,230, 130,000, 392,000, 256,000, 357,000 and
398,554.
2. On April 28, 1999, the Gerard G. Leeds Lifetime Trust, the Liselotte J.
Leeds Lifetime Trust, Michael S. Leeds, Richard A. Leeds, Daniel H.
Leeds, Greg Jobin-Leeds and Jennifer Leeds contributed an aggregate of
1,282,052 shares of Class A Common Stock to the Company (after causing
certain of such shares of Class A Common Stock to be converted from Class
B Common Stock) pursuant to an agreement with the Company that it would
put such shares in the 1999 Leeds Family/CMP Media Inc. Employee Benefit
Trust for the benefit of substantially all employees of the Company.
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3. On April 29, 1999, Steven Weitzner, a Vice President of the Company,
sold 250 shares of Class A Common Stock in a brokerage transaction.
(b) To the best of the Company's knowledge, all of its executive officers,
directors, affiliates or subsidiaries currently intend to tender all Shares
which are held of record or beneficially owned by such persons pursuant to the
Offer, other than Shares, if any, held by such persons which, if tendered, could
cause such person to incur liability under the provisions of Section 16(b) of
the Securities Exchange Act of 1934, as amended.
ITEM 7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Prior to entering into the Merger Agreement, the Company had contacts
with other entities that had expressed interest in the Company, as described in
Item 4(b). Upon execution of the Merger Agreement, the Company ceased contacts
with such other entities. No discussions are underway or are being undertaken by
the Company in response to the Offer that relate to or would result in (1) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any of its subsidiaries; (2) a purchase, sale or transfer of a
material amount of assets by the Company or any of its subsidiaries; (3) a
tender offer for or other acquisition of securities by or of the Company; or (4)
any material change in the present capitalization or dividend policy of the
Company.
(b) There is no transaction, board resolution, agreement in principle or
signed contract in response to the Offer other than as disclosed in Item 3(b)
and Item 4(b) of this statement, that relates to or would result in (1) an
extraordinary transaction, such as a merger or reorganization, involving the
Company or any of its subsidiaries; (2) a purchase, sale or transfer of a
material amount of assets by the Company or any of its subsidiaries; (3) a
tender offer for or other acquisition of securities by or of the Company; or (4)
any material change in the present capitalization or dividend policy of the
Company.
ITEM 8. ADDITIONAL INFORMATION TO BE FURNISHED
The Information Statement attached as Annex A hereto is being furnished in
connection with the possible designation by Merger Sub, pursuant to the Merger
Agreement, of certain persons to be appointed to the Company's Board of
Directors other than at a meeting of the Company's stockholders.
ITEM 9. MATERIAL TO BE FILED AS EXHIBITS
1 Agreement and Plan of Merger, dated as of April 28, 1999, by and among
United News & Media plc, Miller Freeman Worldwide plc, MFW Acquisition Corp.
and CMP Media Inc.
2 Tender and Voting Agreement, dated as of April 28, 1999, by and among MFW
Acquisition Corp. and Certain Stockholders of CMP Media Inc.
3 Agreement to Terminate Option Agreement and Stockholders' Agreement and to
Amend Employment Agreement, dated as of April 23, 1999, by and between CMP
Media Inc. and Michael S. Leeds.
4 Agreement to Terminate Option Agreement and Stockholders' Agreement and to
Amend Employment Agreement, dated as of April 23, 1999, by and between CMP
Media Inc. and Daniel H. Leeds.
5 Agreement to Amend Option Agreement, dated as of April 23, 1999, by and
between CMP Media Inc. and Kenneth D. Cron.
6 Letter to Stockholders dated May 6, 1999.*
7 Opinion of Lazard Freres & Co. LLC dated April 28, 1999.*
8 Press Release issued jointly by United News & Media plc and CMP Media Inc.
on April 29, 1999.
* Included in copies mailed to stockholders.
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SIGNATURE
After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: May 6, 1999
<TABLE>
<S> <C> <C>
CMP MEDIA INC.
By: /s/ Michael S. Leeds
Michael S. Leeds
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
<PAGE>
ANNEX A
CMP MEDIA INC.
600 COMMUNITY DRIVE
MANHASSET, NEW YORK 11030
INFORMATION STATEMENT PURSUANT
TO SECTION 14(F) OF THE SECURITIES
EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
NO VOTE OR OTHER ACTION OF THE COMPANY'S STOCKHOLDERS IS REQUIRED
IN CONNECTION WITH THIS INFORMATION STATEMENT.
NO PROXIES ARE BEING SOLICITED AND
YOU ARE REQUESTED NOT TO SEND THE COMPANY A PROXY.
This Information Statement is being mailed on or about May 6, 1999, as part
of the Solicitation/ Recommendation Statement on Schedule 14D-9 (the "Schedule
14D-9") to the holders of shares ("Shares") of Class A Common Stock, $0.01 par
value per share (the "Class A Common Stock"), of CMP Media Inc. (the "Company").
Capitalized terms used and not otherwise defined herein shall have the meaning
ascribed to them in the Schedule 14D-9. You are receiving this Information
Statement in connection with the possible election of persons designated by
Merger Sub to a majority of the seats on the Board of Directors of the Company
(the "Board of Directors"). The Merger Agreement requires the Company, after the
purchase by Merger Sub pursuant to its cash tender offer to acquire all of the
Shares (the "Offer") or such number of Shares representing not less than a
majority of the outstanding shares of Common Stock on a fully diluted basis, to
cause Merger Sub's designees (the "Designees") to be elected to a majority of
the seats on the Board of Directors as set forth below. This Information
Statement is required by Section 14(f) of the Securities Exchange Act of 1934
(the "Exchange Act") and Rule 14f-1 thereunder. You are urged to read this
Information Statement carefully. However, you are not required to take any
action.
Pursuant to the Merger Agreement, Merger Sub commenced the Offer on May 6,
1999. The Offer is scheduled to expire on June 3, 1999.
The information contained in this Information Statement (including
information listed in Schedule I attached hereto) concerning Merger Sub, Parent,
MF Worldwide, United and the Designees has been furnished to the Company by
Merger Sub, Parent, MF Worldwide and United, and the Company assumes no
responsibility for the accuracy or completeness of such information.
GENERAL
The Company's Class A Common Stock and Class B Common Stock, par value $0.01
per share (the "Class B Common Stock" and, collectively, with the Class A Common
Stock, the "Common Stock"), are the only classes of voting securities of the
Company outstanding. Each share of Class A Common Stock has one vote. As of
April 28, 1999, there were 12,948,956 shares of Class A Common Stock
outstanding. Each share of Class B Common Stock has ten votes. As of April 28,
1999, there were 10,152,810 shares of Class B Common Stock outstanding.
DESIGNEES
Pursuant to the Merger Agreement, promptly upon the purchase by Merger Sub
of Shares pursuant to the Offer, and from time to time thereafter as shares of
Company Common Stock are acquired by Merger Sub, Merger Sub shall be entitled to
designate such number of directors, rounded up to the next whole number, on the
Board of Directors as will give Merger Sub, subject to compliance with Section
14(f) of the Exchange Act, representation on the Board of Directors of the
Company equal to at least that number of directors which equals the product of
the total number of directors on the Board of Directors (giving effect to the
directors appointed or elected pursuant to this sentence) multiplied by the
percentage obtained by dividing (i) the aggregate number of votes represented by
the Shares beneficially owned by Merger Sub or any affiliate of Merger Sub
(including such Shares as are accepted for payment pursuant to the Offer, but
excluding Shares held by the Company) by (ii) the number of votes represented by
all Shares outstanding
<PAGE>
(excluding Shares held by the Company). At such times, if requested by Merger
Sub, the Company will also cause each committee of the Board of Directors to
include persons designated by Merger Sub constituting the same percentage of
each such committee as Merger Sub's designees are of the Board of Directors.
Merger Sub has informed the Company that it will choose the Designees from
the individuals listed in Schedule I attached hereto. Merger Sub has informed
the Company that each of the individuals listed in Schedule I has consented to
act as a director if so designated. The business address of Merger Sub and
Parent is 32 Union Square East, 5th Floor South, New York, New York 10003.
DIRECTORS OF THE COMPANY
The directors of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE
- ---------------------------------------------------------------------------------------- ---
<S> <C>
Richard W. Anderson..................................................................... 61
Kenneth D. Cron......................................................................... 42
Daniel H. Leeds......................................................................... 43
Gerard G. Leeds......................................................................... 76
Lilo J. Leeds........................................................................... 71
Michael S. Leeds........................................................................ 46
Richard A. Leeds........................................................................ 45
Sharon Lee Patrick...................................................................... 56
</TABLE>
Richard W. Anderson was elected a director of the Company in October 1997
and is the Chairperson of the Audit Committee and a member of the Compensation
Committee of the Board. Mr. Anderson retired in 1997 as Vice President and
General Manager of the Microwave and Communications Group of Hewlett-Packard
Company, after having been employed by that company for 38 years. After retiring
from Hewlett-Packard, he became Executive Chairman and CEO of Microelectronics
Technology Incorporated, a position he held until October of 1998. Mr. Anderson
is also a director of Wireless Data Corporation, ScyTek Laboratories, Inc.,
Microelectronics Technology Incorporated and Novalux.
Kenneth D. Cron is an Executive Vice President of the Company and has been
its President of Publishing since 1994. He joined the Company in 1978 and held
various sales, publishing and group publishing positions in its technology
publications business prior to assuming his present responsibilities. He was
elected a director of the Company in October 1997.
Daniel H. Leeds is an Executive Vice President of the Company and has been
the President of International of the Company since 1992. He joined the Company
in 1985 and held positions in its printing and electronic publishing businesses
prior to assuming his present responsibilities. He has served as a director of
the Company since 1987.
Gerard G. Leeds has been a director since 1971 when he and his wife, Lilo
Leeds, founded the Company. Mr. Leeds served as the President and Chief
Executive Officer of the Company until 1988 when he assumed his current position
as Co-Chairperson of the Board. Mr. Leeds also serves as Co-Chairperson and a
director of Institute for Student Achievement, Inc., a not-for-profit public
charity.
Lilo J. Leeds has been a director since 1971 when she and her husband,
Gerard Leeds, founded the Company. Mrs. Leeds served as a Senior Vice President
of the Company until 1987 when she was appointed Chairperson of the Board. In
1988, she became Co-Chairperson of the Board. Mrs. Leeds also serves as
Co-Chairperson and a director of Institute for Student Achievement, Inc., a not-
for-profit public charity.
Michael S. Leeds has been the President and Chief Executive Officer of the
Company since 1988. He joined the Company in 1984 and, prior to assuming his
present responsibilities, held publishing and group publishing positions in its
travel publications business and led the Company's entry into international
publishing. He has served as a director of the Company since 1987.
A-2
<PAGE>
Richard A. Leeds is the President of InfiniteStores.com Inc. Mr. Leeds has
served as a director of the Company since February 1997 and previously served as
a director from December 1991 to February 1993 and from February 1995 to
February 1996.
Sharon Lee Patrick is the President and a director of Martha Stewart Living
Omnimedia LLC. She was elected a director of the Company in October 1997 and is
a member of the Audit Committee and the Chairperson of the Compensation
Committee of the Board. Prior to joining Martha Stewart Living Omnimedia in
1997, she was an executive at Cablevision Systems Corporation and a partner of
McKinsey & Company, Inc.
BOARD COMMITTEES, MEETINGS AND COMPENSATION
The Board of Directors has a standing Audit Committee and Compensation
Committee. It does not have a nominating committee or a committee performing
similar functions. The Audit Committee consists solely of Mr. Anderson and Ms.
Patrick and held three meetings in 1998. The Compensation Committee consists
solely of Mr. Anderson and Ms. Patrick and held two meetings during 1998. The
Board of Directors held a total of four meetings during 1998 (including
regularly scheduled and special meetings). Each director attended all of the
meetings of the Board of Directors held during 1998 and all of the meetings held
by the committees of the Board of Directors on which he or she served during
1998.
AUDIT COMMITTEE. The functions of the Audit Committee include recommending
to the Board of Directors the appointment of the Company's independent
accountants; reviewing with the independent accountants and the Company's
internal auditors their annual audit plans; reviewing management's plans for
engaging the independent accountants to perform management advisory services;
discussing with management, the independent accountants and the internal
auditors the adequacy of the Company's internal controls and financial reporting
process; monitoring significant accounting and reporting issues; reviewing the
Company's policies and procedures concerning officers' expenses; and monitoring
compliance with the Company's policies relating to ethics and conflicts of
interest. Both the independent accountants and the internal auditors have
unrestricted access to the Audit Committee, including the opportunity to meet
with the Audit Committee alone.
COMPENSATION COMMITTEE. The functions of the Compensation Committee include
overseeing the administration of the Company's compensation policies and
practices; establishing and administering the compensation plans for members of
senior management and authorizing any adjustments thereto; administering the
Company's Stock Incentive Plan and authorizing all awards granted thereunder;
and reporting annually to the stockholders of the Company on matters concerning
the compensation of executives of the Company.
Each non-employee director currently receives an annual retainer of $20,000
for serving as a member of the Board of Directors, a fee of $2,500 for each
meeting of the Board attended and a fee of $1,000 for each meeting of a
committee of the Board held on a date not coinciding with a meeting of the
Board. The annual retainer of each non-employee director owning less than 1% of
the Company's outstanding Common Stock is paid 50% in cash and 50% in the form
of options to purchase shares of the Company's Class A Common Stock. The
per-share exercise price of such options is equal to the fair market value of a
share of Class A Common Stock on the date of grant; the number of options
granted is determined using the Black-Scholes option-pricing model; and options
vest in installments of one-third on each anniversary of the grant date. Each
non-employee director has the right to waive the payment of all or any portion
of his or her annual cash retainer in exchange for options to purchase Class A
Common Stock. Following initial election and qualification to the Board, each
non-employee director who is not a member of the Founding Family (as hereafter
defined) receives a grant of restricted shares of Class A Common Stock with a
fair market value of $10,000. Such restricted shares vest over a period of five
years.
Directors who are also employees of the Company receive no compensation for
their service as directors of the Company.
A-3
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Richard Anderson and Sharon Patrick are the only members of both the Audit
Committee and the Compensation Committee. Mr. Anderson and Ms. Patrick are
independent directors and neither is a current or former employee of the
Company.
EXECUTIVE OFFICERS OF THE COMPANY
The executive officers of the Company are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ------------------------------------ --- ---------------------------------------------------------------------
<S> <C> <C>
Michael S. Leeds.................... 46 President, Chief Executive Officer and a Director
Kenneth D. Cron..................... 42 Executive Vice President, President of Publishing and a Director
Daniel H. Leeds..................... 43 Executive Vice President, President of International and a Director
Joseph E. Sichler................... 58 Executive Vice President and Chief Financial Officer
Robert D. Marafioti................. 51 Executive Vice President, Secretary and General Counsel
Barbara Kerbel...................... 52 Vice President of Corporate Communications
Mary Jones-Herbert.................. 54 Vice President of Human Resources
Debra Robinson...................... 46 Vice President/Chief Information Officer
Jeffrey L. Strief................... 43 Executive Vice President, Technology Buyers
John Russell........................ 39 Senior Vice President, Channel
Steven Weitzner..................... 48 Vice President, OEM
Gretchen Teichgraeber............... 45 Vice President, Marketing and Information Services
</TABLE>
All executive officers of the Company are elected by the Board of Directors
annually.
Michael S. Leeds has been the President and Chief Executive Officer of the
Company since 1988. He joined the Company in 1984 and was elected a director in
1987. Mr. Leeds is the brother of Daniel H. Leeds, the President of
International, and the son of Gerard and Lilo Leeds, founders of the Company and
Co-Chairpersons of the Board of Directors.
Kenneth D. Cron is an Executive Vice President of the Company and has been
the President of Publishing of the Company since 1994. He joined the Company in
1978 and held various sales, publishing and group publishing positions prior to
assuming his present responsibilities. He was elected a director in 1997.
Daniel H. Leeds is an Executive Vice President of the Company and has been
the President of International since 1992. He joined the Company in 1985 and was
elected a director in 1987. He is the brother of Michael S. Leeds, the President
and Chief Executive Officer of the Company, and the son of Gerard and Lilo
Leeds, founders of the Company and Co-Chairpersons of the Board of Directors.
Joseph E. Sichler joined the Company as Chief Financial Officer in 1992. He
was elected a Vice President in 1996 and an Executive Vice President of the
Company in 1999.
Robert D. Marafioti joined the Company as General Counsel in 1988. He was
elected a Vice President in 1993, Secretary of the Company in 1997 and an
Executive Vice President of the Company in 1999.
A-4
<PAGE>
Barbara Kerbel has been the Vice President of Corporate Communications of
the Company since 1995. She first joined the Company in 1981 and held various
editorial, marketing and communications positions prior to assuming her present
responsibilities.
Mary Jones-Herbert joined the Company as Vice President of Human Resources
in October 1997. From 1995 to 1997, she served as Director of Human Resources,
Finance, of Allied Signal Inc., which she joined in 1993.
Debra Robinson joined the Company as Vice President/Chief Information
Officer in October 1997. From 1995 to 1997, she served as Vice President,
Information Technologies, of Delaware North Companies.
Jeffrey L. Strief joined the Company in 1985 and held various sales,
publishing and group publishing positions prior to his election as a Senior Vice
President of the Company since 1994. He assumed his present responsibilities as
the group publisher of the Company's technology buyers publications in 1997 and
was elected an Executive Vice President in 1999.
John Russell joined the Company in 1983 and held various editorial and
publishing positions prior to being elected a Vice President and assuming his
present responsibilities as the group publisher of the Company's channel
publications in 1994. He was elected a Senior Vice President of the Company in
1999.
Steven Weitzner joined the Company in 1984 and held various editorial and
publishing positions prior to assuming his present responsibilities as the group
publisher of the Company's OEM publications. He was elected a Vice President in
1999.
Gretchen Teichgraeber joined the Company as General Manager, Publishing in
1997. She was promoted to Vice President, Marketing and Information Services in
1999. Prior to joining the Company, she served as Director, Marketing Planning
and Product Management at The New York Times newspaper.
A-5
<PAGE>
EXECUTIVE COMPENSATION
The following table provides information concerning all compensation awarded
to, earned by or paid to the Company's Chief Executive Officer and the four
other most highly compensated executive officers of the Company who were serving
as executive officers at December 31, 1998 (collectively, the "Named Executive
Officers") for all services rendered in all capacities to the Company in 1998,
1997 and 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION LONG-TERM COMPENSATION
---------------------------------------------------- -----------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
RESTRICTED
STOCK SECURITIES
OTHER ANNUAL AWARDS UNDERLYING ALL OTHER
NAME & PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION (1) (2) OPTIONS COMPENSATION (3)
- ------------------------------- --------- --------- ------------ ---------------- --------- ----------- -----------------
Michael S. Leeds, ............. 1998 $ 600,000 $ 689,029 -- -- -- $ 16,438
President & Chief Executive 1997 600,000 1,092,458 -- -- -- 14,481
Officer 1996 600,000 1,908,062 -- $6,606,000 755,040 13,236
Kenneth D. Cron, .............. 1998 $ 500,000 $ 525,889 -- -- -- $ 19,907
President of Publishing 1997 500,000 900,727 -- -- -- 17,562
1996 500,000 1,727,316 -- $4,404,000 943,800 17,888
Daniel H. Leeds, .............. 1998 $ 450,000 $ 166,977 138,752 -- -- $ 15,860
President of International 1997 400,000 $ 376,605 121,000 -- -- 13,967
1996 400,000 506,814 121,000 $4,404,000 943,800 12,461
Jeffrey L. Strief, ............ 1998 $ 400,000 $ 335,467 -- -- -- $ 15,860
Executive Vice President, 1997 375,000 625,000 -- -- 67,925 22,338
Technology Buyers 1996 325,000 675,001 -- -- -- 14,711
John Russell, Senior Vice ..... 1998 $ 325,000 $ 260,134 -- -- -- $ 17,016
President, Channel 1997 300,000 325,000 -- -- 51,123 24,685
1996 275,000 300,462 -- -- -- 16,262
</TABLE>
- ------------------------
(1) The amounts shown for Daniel Leeds, who is based in Europe, reflect a cost
of living allowance of $90,000 for 1998 and $80,000 for 1997 and 1996,
reimbursement of educational expenses of $38,252 for 1998 and $35,000 for
1997 and 1996 and a car allowance of $6,000 for all years. The Company has
not included in the Summary Compensation Table the value of incidental
personal perquisites furnished by the Company to any of the other Named
Executive Officers, since such value did not exceed the lesser of $50,000 or
10% of the total of annual salary and bonus reported for any such Named
Executive Officers.
(2) The amounts shown represent the fair market value of the restricted stock on
the date of purchase (as determined by an independent appraisal) less the
amount paid by each Named Executive Officer for such stock. Holders of
restricted stock are entitled to dividends, if any, paid on the Company's
Common Stock. Such stock is subject to restrictions on resale until December
31, 2003 in the case of Michael Leeds and December 31, 2005 in the case of
Kenneth Cron and Daniel Leeds, except that as of January 1, 1998, a limited
number of shares of restricted stock may be sold each year provided that the
Company's market capitalization is a certain amount on the business day
preceding the date of sale of such shares. Michael Leeds purchased a total
of 566,280 shares of restricted stock with an appraised aggregate fair
market value at the date of purchase of $7,200,000; Kenneth Cron purchased a
total of 377,520 shares of restricted stock with an appraised aggregate fair
market value at the date of purchase of $4,800,000; and Daniel Leeds
purchased a total of 377,520 shares of restricted stock with an appraised
aggregate fair market value at the date of the purchase of $4,800,000. At
December 31, 1998, the aggregate fair market value of the restricted stock
held by Michael Leeds, Kenneth Cron and Daniel Leeds was $10,334,610,
$6,889,740 and $6,889,740, respectively. Under the terms of the purchase of
restricted stock, in the event of a merger or sale which results in a change
in control prior to March 1, 2000, vesting of the stock will accelerate the
respect to the same percentage of such shares as the percentage of shares of
the principal stockholders of the Company sold in such merger or sale.
(3) Amounts reported under "All Other Compensation" include in 1998: (a)
contributions made by the Company on behalf of each Named Executive Officer
under the Company's Profit Sharing and Retirement Savings Plan and (b) $231
for life insurance premiums paid by the Company for the benefit of each
Named Executive Officer under the Company's group life insurance benefit
plan.
A-6
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-
OPTIONS/SARS AT FISCAL THE-MONEY OPTIONS/SARS AT
SHARES YEAR-END (1) (2) FISCAL YEAR-END (1) (2)
ACQUIRED VALUE ---------------------------- --------------------------
NAME ON EXERCISE REALIZED EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- -------------------------------------------- --------------- --------- ------------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Michael S. Leeds............................ (3) $ 336,800 20,000 815,040 $ 250,800 $ 4,927,651
Kenneth D. Cron............................. (3) 336,800 67,190 956,610 511,761 5,710,533
Daniel H. Leeds............................. (3) 336,800 20,000 1,003,800 250,800 5,971,494
Jeffrey L. Strief........................... -- -- 10,367 57,558 57,330 318,296
John Russell................................ -- -- 7,507 43,616 41,514 241,196
</TABLE>
- ------------------------
(1) As of December 31, 1998, Michael Leeds held 755,040 options, all of which
were unexercisable; Kenneth Cron held 943,800 options, 47,190 of which were
exercisable and 896,610 of which were unexercisable; and Daniel Leeds held
943,800 options, all of which were unexercisable. The value of exercisable
and unexercisable options as included in the above table was calculated as
the difference between the exercise price of the options and the fair market
value of the Company's Class A Common Stock as of December 31, 1998. If
there is a change in control prior to March 1, 2000, all of the options held
by Kenneth Cron, Jeffrey Strief and John Russell will become 100 percent
exercisable and all of the options held by Michael Leeds and Daniel Leeds
will be waived and canceled.
(2) Under the Company's Equity Appreciation Plan (the "EAP"), certain Named
Executive Officers hold share appreciation rights ("SARs"), the value of
which is determined annually by a formula based on the Company's net sales
and pre-tax earnings for the year. The terms of the EAP provide that
participants must redeem 20% of their SARs by June 30 of each of the years
1998 through 2002. All payments under the EAP are in the form of cash. As of
December 31, 1998, Michael Leeds, Kenneth Cron and Daniel Leeds each held
80,000 SARs under the EAP, 20,000 of which are redeemable in 1999 for
$250,800 (which are therefore included as exercisable above) and 60,000 of
which are redeemable in 2000 through 2002 (which are therefore included as
unexercisable above). The value of 80,000 SARs at December 31, 1998 was
$1,003,080. If there is a change in control prior to March 1, 2000, the
remaining 60,000 SARs held by Michael Leeds, Kenneth Cron and Daniel Leeds
would become redeemable for an amount based upon the value of the
transaction.
(3) During 1998, in accordance with the EAP, Michael Leeds, Kenneth Cron and
Daniel Leeds each redeemed 20% of their SARs. As all payments under the EAP
are in the form of cash, no shares were issued upon redemption of the SARs;
each individual received a cash payment of $336,800.
PENSION PLAN
The Company's noncontributory defined benefit pension plan (the "Pension
Plan") was frozen as of December 31, 1992. No additional benefits have accrued
since that date or will accrue in the future. The fixed benefit payable monthly
under that Pension Plan for the life of each of the Named Executive Officers
after retirement at age 65 is as follows:
<TABLE>
<CAPTION>
NAME MONTHLY BENEFIT
- ----------------------------------------------------------------------------- ---------------
<S> <C>
Michael S. Leeds............................................................. $ 728
Kenneth D. Cron.............................................................. 1,002
Daniel H. Leeds.............................................................. 530
Jeffrey L. Strief............................................................ 592
John Russell................................................................. 435
</TABLE>
EMPLOYMENT AGREEMENTS
Michael Leeds, Daniel Leeds and Kenneth Cron each have an employment
agreement with the Company. Each employment agreement is terminable at the will
of either party, provided that the employee gives ninety days notice of any
voluntary resignation or ten business days notice of a Resignation for Good
Reason, or the Company gives ten business days notice of a Dismissal for Cause
(as defined in the respective employment agreements). Each agreement provides
that the employee shall be entitled to an annual base salary, the benefits
provided to employees generally and an annual incentive bonus determined by the
Compensation Committee of the Board of Directors.
A-7
<PAGE>
Each agreement prohibits the disclosure or use of any of the Company's
confidential or proprietary information. The agreements with Michael Leeds and
Daniel Leeds provide that the employee will not compete with the Company for up
to three years following termination of employment as long as the Company
continues to pay cash compensation as determined under the respective
agreements; provided, however, that such payments will be made only if
employment with the Company terminates by reason of Dismissal Without Cause or
Resignation for Good Reason (as defined in the respective employment agreements)
and not by reason of voluntary resignation or Dismissal for Cause (as defined in
the respective employment agreements) and only until the employee attains the
age of sixty-five. The agreements with Michael Leeds and Daniel Leeds also
provide that, upon termination of employment by reason of retirement at or after
attainment of age 65, the Company has the right to require, at its option,
continued compliance with the non-compete covenants for a period of up to two
additional years as long as the Company continues to pay an amount equal to that
determined under the agreements. The agreement with Mr. Cron provides that he
will not compete with the Company for up to five years following termination of
employment as long as the Company pays him cash compensation as determined under
his employment agreement. The agreement with Mr. Cron also provides that, upon
termination of employment by reason of retirement at or after attaining age 65,
the Company has the right to require, at its option, continued compliance with
the non-compete covenants for a period of up to five additional years as long as
the Company continues to pay cash compensation determined under his employment
agreement.
Each of Michael S. Leeds, Daniel H. Leeds and Kenneth D. Cron entered into
an agreement with the Company as of April 23, 1999 (each, an "Amendment
Agreement") providing for certain amendments to his existing option agreement
and employment agreement with the Company (and, in the case of Michael Leeds and
Daniel Leeds, to their respective stockholders' agreements which govern their
restricted shares of Class A Common Stock). Under their respective Amendment
Agreements, each of Michael Leeds and Daniel Leeds agreed that his option
agreement would be terminated in the event that the Company consummated a
transaction resulting in a change of control of the Company on or before March
1, 2000, and that all options issuable to him under such option agreement would
thereupon be canceled. In consideration of the termination of the option
agreements of Michael Leeds and Daniel Leeds, the Company agreed, in the event
of a change of control, to terminate their respective stockholders' agreements
and to amend certain provisions of their respective employment agreements in
order to modify the scope of certain restrictive covenants and to eliminate the
Company's right to reduce its severance payments to each executive by 50% of
cash compensation earned by such executive from other employment after
termination of his employment with the Company. Under the Amendment Agreement
with Mr. Cron, his option agreement was amended to provide that, upon a change
of control of the Company, all of Mr. Cron's unvested options to purchase Class
A Common Stock would immediately vest and become exercisable. No changes were
made to Mr. Cron's stockholders' agreement or employment agreement with the
Company. The Amendment Agreements (the terms of which are incorporated by
reference herein) have been filed with the Securities and Exchange Commission as
Exhibits 3, 4 and 5 to the Schedule 14D-9 to which this information statement
pursuant to Rule 14f-1 of the Exchange Act is attached as Annex A.
RETENTION BONUSES
The Company adopted the CMP Media Inc. Retention Bonus Plan (the "Retention
Plan") effective March 1, 1999, pursuant to which a committee appointed by the
Board of Directors of the Company has the discretion to award bonuses to
employees who remain employed with the Company through a period specified by the
committee (the "Retention Period"). The committee may define the amount of a
Retention Plan bonus as a fixed dollar amount or as a formula. If an employee
who receives a Retention Plan award is terminated by the Company for cause, as
defined in the Retention Plan, or resigns voluntarily without good reason, as
defined in the Retention Plan, prior to the expiration of his or her Retention
Period, he or she forfeits the Retention Plan bonus.
A-8
<PAGE>
SEVERANCE PAY
The Company has adopted the CMP Media Inc. Severance Pay Plan (the
"Severance Plan"), which will become effective upon the closing of a transaction
resulting in a change of control of the Company. The Severance Pay Plan provides
benefits to every employee of the Company who is not a party to a separate
written agreement with the Company which provides severance-type benefits
(unless such agreement confirms that he or she is eligible to receive benefits
under the Severance Plan as well). If an eligible employee is terminated by the
Company without cause, as defined in the Severance Plan, or resigns for good
reason, as defined in the Severance Plan, within one year after the closing date
of such a transaction, he or she is entitled to two weeks of pay for each full
year of service with the Company, although a committee appointed by the Board of
Directors may award benefits in excess of that amount. The minimum benefit is 8
weeks of pay and the maximum benefit is 104 weeks of pay. The Company is also
required to pay a share of such employee's COBRA premiums through the severance
period (if the employee elects to receive healthcare insurance coverage under
COBRA) and to provide outplacement services for the employee's benefit.
OTHER EXECUTIVE AGREEMENTS
The Company also entered into agreements with five of its executive officers
as of March 1, 1999, which agreements provide that, in the event of a change of
control, the Company will pay each executive a bonus under the Retention Plan
(provided the executive remains with the Company through the change of control
and does not resign without good reason, as defined in such agreements, for 90
days thereafter) and all of the executive's unvested options to purchase Class A
Common Stock will immediately vest and become exercisable on the date of such
change of control. Such agreements also provide that, if the executive is
dismissed by the Company without cause (as defined in such agreements) or
resigns for good reason (as defined in such agreements) within eighteen months
after a change of control, the executive is entitled to extended severance
benefits under the Severance Plan provided that he or she does not compete with
the Company during the severance period. In addition, the Company has the right
to reduce its severance payments by 50% of any cash compensation that the
executive receives from other employment during that period.
The Company entered into agreements with four of its other executive
officers as of March 1, 1999, which agreements required them to perform services
in connection with the Company's exploration of strategic alternatives as well
as their regular duties and, for a period of three years following a change of
control of the Company, to render services to the Company in their current
capacities and comply with certain restrictive covenants not to compete with the
Company, to solicit its employees, to interfere in its customer or supplier
relationships or to disclose its confidential information. Such agreements also
provide that, in the event of a change of control, the Company will pay each
executive a bonus (provided the executive remains with the Company through the
change of control and does not resign without good reason, as defined in such
agreement, for 90 days thereafter) and all of the executive's unvested options
to purchase Class A Common Stock will immediately vest and become exercisable on
the date of such change of control. The aggregate amount of the projected
bonuses to the nine executives who are parties to the above-described agreements
is approximately $17,375,000.
In the event the benefits received by any of the four above-mentioned
executives under such agreements are subject to an excise tax as an "excess
parachute payment", the Company will pay the executive a gross-up bonus to
offset the effect of such excise tax. If, following a change of control, any of
the four executives' employment is terminated by the Company without cause (as
defined in such agreement), or if an executive terminates employment with good
reason (as defined in such agreement), the executive remains subject to the
above-described restrictive covenants but is entitled to receive base salary and
incentive bonus compensation for the duration of the restricted period (reduced
by 50% of any cash compensation earned from other employment). The agreements
provide substantially similar benefits in the event the executive resigns,
without good reason, more than one year after the change of control. If an
executive resigns prior to the first anniversary of the change of control or is
terminated for cause, he is not entitled to any continued payments or benefits
under the agreements, but remains subject to the restrictive covenants.
A-9
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table furnishes certain information as of May 3, 1999 as to
the Common Stock beneficially owned by each of the directors, by each of the
Named Executive Officers, by all directors and executive officers as a group,
and by all other persons known to the Company to be the beneficial owners of
more than 5% of either class of the Company's Common Stock.
<TABLE>
<CAPTION>
CLASS A COMMON STOCK CLASS B COMMON STOCK
--------------------- -----------------------
NAME OF BENEFICIAL OWNER NUMBER % NUMBER %
- ----------------------------------------------------------------- ---------- --------- ------------ ---------
<S> <C> <C> <C> <C>
Richard W. Anderson.............................................. 408 *
Kenneth D. Cron (1).............................................. 377,620 2.92%
Greg Jobin-Leeds (2)............................................. 256,000 1.98% 1,392,567 13.72%
Daniel H. Leeds (3).............................................. 648,620 5.01% 1,705,999 16.80%
Jennifer Leeds (4)............................................... 303,330 2.34% 1,406,183 13.85%
Gerard G. Leeds (5).............................................. 2,217,684 21.84%
Lilo J. Leeds (5)................................................ 2,217,684 21.84%
Michael S. Leeds (6)............................................. 500,638 3.87% 1,987,640 19.58%
Richard A. Leeds (7)............................................. 540,120 4.17% 1,442,737 14.21%
Sharon Lee Patrick............................................... 408 *
John Russell..................................................... 880 *
Jeffrey L. Strief................................................ 1,820 *
All directors and executive officers as a group (14 persons)..... 1,334,397 10.31% 7,354,060 72.43%
1999 Leeds Family/CMP Media Inc. ................................ 1,282,052 9.90%
Employee Benefit Trust
c/o CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Connor Clark & Company, Ltd. (8) ................................ 358,100 2.77%
40 King Street, Ste. 5110, Box 125
Toronto, Ontario
Canada M5H 3Y2
Private Capital Management, Inc. (9) ............................ 1,563,450 12.07%
3003 Tamiami Trail North
Naples, FL 34103
J.&W. Seligman & Co. Incorporated (10) .......................... 910,500 7.03%
100 Park Avenue
New York, NY 10017
Wanger Asset Management, L.P. (11) .............................. 480,000 3.71%
227 W. Monroe Street, Ste 3000
Chicago, IL 60606
</TABLE>
- ------------------------
* Represents less than 1.0% of the outstanding shares of Class A Common Stock.
(1) Includes 89,288 shares of Class A Common Stock held in trust by Kenneth Cron
as trustee for certain members of his family.
(2) Includes 256,000 shares of Class A Common Stock held by a private foundation
controlled by Greg Jobin-Leeds and 330,740 shares of Class B Common Stock
held in trust by Greg Jobin-Leeds as trustee for certain members of his
family.
A-10
<PAGE>
(3) Includes 256,000 shares of Class A Common Stock held by a private foundation
controlled by Daniel H. Leeds and 392,520 shares of Class A Common Stock and
195,171 shares of Class B Common Stock held in trust by Daniel H. Leeds as
trustee for certain members of his family.
(4) Includes 303,330 shares of Class A Common Stock and 27,586 shares of Class B
Common Stock held by a private foundation controlled by Jennifer Leeds.
(5) 1,111,342 shares of Class B Common Stock are held by Gerard G. Leeds, and
1,106,342 shares of Class B Common Stock are held by Lilo J. Leeds. As
husband and wife, Gerard and Lilo Leeds are deemed to be the beneficial
owner of shares held by the other spouse, and therefore, the combined
beneficial ownership is shown in the table. Gerard and Lilo each disclaim
beneficial ownership of the shares held by the other.
(6) Includes 130,000 shares of Class A Common Stock held by a private foundation
controlled by Michael S. Leeds and 298,140 shares of Class A Common Stock
and 957,504 shares of Class B Common Stock held in trust by Michael S. Leeds
as trustee for certain members of his family.
(7) Includes 975,760 shares of Class B Common Stock held in trust by Richard A.
Leeds as trustee for certain members of his family, and 530,820 shares of
Class A Common Stock and 30,000 shares of Class B Common Stock held by a
private foundation controlled by Richard A. Leeds.
(8) This information derived from Schedule 13G filed by Connor Clark & Company,
Ltd on February 10, 1999.
(9) This information derived from Schedule 13G filed by Private Capital
Management, Inc. on February 16, 1999.
(10) This information derived from Schedule 13G filed by J. & W. Seligman & Co.
Incorporated on February 10, 1999.
(11) This information derived from Schedule 13G filed by Wanger Asset
Management, L.P. on February 23, 1999.
A-11
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Directors Michael Leeds, Daniel Leeds and Richard Leeds are children of
Directors Gerard and Lilo Leeds, the founders of the Company. Gerard and Lilo
Leeds, Michael Leeds, Daniel Leeds and Richard Leeds are parties to a
stockholders' agreement among Gerard and Lilo Leeds and all of their children
(the "Founding Family"), who collectively control all of the Company's Class B
Common Stock. Under such agreement, the parties are required to vote all their
shares of Class B Common Stock to elect as directors Gerard and Lilo Leeds, all
members of the Founding Family who are full-time senior executive employees of
the Company (currently Michael Leeds and Daniel Leeds) and one of the three
other children of Gerard and Lilo Leeds.
Gerard and Lilo Leeds are the founders and Co-Chairpersons of Institute for
Student Achievement, Inc. (the "Institute"), a not-for-profit public charity to
which the Company provides office space and services. The fair market value of
such office space and services provided in 1998 was approximately $605,000. The
Board of Directors passed a resolution which limits the aggregate annual cash
and in-kind contributions by the Company to public or private charities or
foundations (including the Institute) to 3% of the Company's consolidated income
before provision for income taxes for the preceding fiscal year.
At December 31, 1998, Kenneth Cron was indebted to the Company in the
principal amount of $750,000. The Company holds a note receivable for such debt,
which bears interest at a rate approximating LIBOR and on which interest
payments are due quarterly and principal payments annually. Full payment of the
note is due in 2023, subject to acceleration under certain conditions. Mr. Cron
will repay this debt in full within five business days after the closing of the
Offer.
The Company is the guarantor of a bank loan to Michael Leeds in the
principal amount of $1,200,000. The loan is due and payable in full on November
14, 2001, but under an agreement dated April 15, 1997, the Company is required
to extend the guarantee of this loan until December 31, 2005. Mr. Leeds will
repay this loan in full within five business days after the closing of the
Offer.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
the Company's officers and directors, and persons who own more than ten percent
of a registered class of the Company's equity securities, to file reports of
ownership and changes of ownership with the Securities and Exchange Commission
and each exchange on which the Company's securities are registered. Officers,
directors and greater than ten percent stockholders are required by Securities
and Exchange Commission regulations to furnish the Company with copies of all
ownership forms they file. Based on a review of such copies and other records
available to the Company including written representations from certain
reporting persons that no forms were required for such persons, to the Company's
knowledge, all Section 16(a) filing requirements applicable to the Company's
directors, officers and greater than ten percent beneficial stockholders were
complied with, except that one late report covering one transaction was filed by
each of Gerard Leeds and Lilo Leeds.
A-12
<PAGE>
SCHEDULE I
DESIGNEES OF MERGER SUB. The following table sets forth the name, current
business address, citizenship, present principal occupation or employment, and
material occupations and positions, offices or employments and business
addresses thereof for the past five years, of each person designated by Merger
Sub to become a member of the Board of Directors of the Company following
consummation of the Offer. None of such persons has been convicted in a criminal
proceeding, nor has any of them been a party to a proceeding related to U.S.
state and federal securities laws. To the Company's knowledge, none of such
persons owns any Shares or has engaged in any transactions with respect to
Shares during the past 60 days.
The designees of Merger Sub to become members of the Board of Directors of
the Company are:
<TABLE>
<CAPTION>
PRESENT PRINCIPAL OCCUPATION OR EMPLOYMENT
NAME AND BUSINESS ADDRESS CITIZENSHIP POSITION AND FIVE-YEAR EMPLOYMENT HISTORY
- ------------------------------------------------- --------------- ---------------------------------------------
<S> <C> <C>
Andrew R. Baker.................................. British Group Development Manager, United News &
United News & Media Inc. Media plc, since February 1997. Graduate
32 Union Square East business studies, International Institute for
5th Floor South Management Development (Switzerland) January
New York, New York 10003 -December 1996. Business development manager,
Woolworths UK plc, 1993 - October 1995.
Gary Marshall.................................... British President and Chief Executive Officer, Miller
Miller Freeman Asia Limited Freeman Asia Ltd., since January 1995. Chief
4401 China Resources Building Financial Officer, Miller Freeman Asia Ltd.,
26 Harbour Road April 1994 - January 1995.
Hong Kong
China
Donald Pazour.................................... United States Chief Operating Officer and President, Miller
Miller Freeman Inc. Freeman Inc., since August 1996. Executive
600 Harrison Street officer, Miller Freeman Inc., 1977 - August
San Francisco, California 94107 1996.
Edwin O. Pinedo.................................. United States Chief Financial Officer, Miller Freeman
Miller Freeman Worldwide plc Worldwide plc, since February 1997. Chief
630 Chiswick High Road Financial Officer, United Advertising
London W4 5BG Publications/Consumer Publishing, 1986 -
United Kingdom February 1997.
Regina Ridley.................................... United States Executive Vice President, Miller Freeman
Miller Freeman Inc. Inc., since September 1998. Executive
600 Harrison Street officer, Miller Freeman Inc., 1981 -
San Francisco, California 94107 September 1998.
</TABLE>
A-13
<PAGE>
ANNEX B
[LETTERHEAD OF LAZARD FRERES & CO. LLC]
The Board of Directors April 28, 1999
CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Dear Members of the Board:
We understand that CMP Media Inc. (the "Company"), United News & Media plc
("United"), Miller Freeman Worldwide plc ("Parent") and MFW Acquisition Corp.,
an affiliate of Parent ("Merger Sub"), have entered into an Agreement and Plan
of Merger (the "Agreement") pursuant to which Merger Sub will commence a tender
offer (the "Offer") to purchase all the issued and outstanding shares of the
Company's Class A common stock, par value $0.01 per share (the "Class A Common
Stock"), and the Company's Class B common stock, par value $0.01 per share (the
"Class B Common Stock" and, collectively with the Class A Common Stock, the
"Common Stock") for $39.00 per share in cash, all as more fully provided in the
Agreement. Pursuant to the Agreement, following consummation of the Offer,
Merger Sub will merge with and into the Company (the "Merger"), and any
remaining outstanding shares of Common Stock (other than Common Stock held by
Parent, Merger Sub or any other affiliate of Parent, shares of Common Stock held
in the treasury of the Company and shares of Common Stock held by stockholders
who demand appraisal for such shares in accordance with the Delaware General
Corporation Law (the "DGCL"), if the DGCL provides for appraisal rights for such
shares in the Merger) will be converted into the right to receive $39.00 in
cash, all as more fully provided in the Agreement. References herein to the
"Consideration" is to the consideration to be received by the holders of the
Common Stock in the Offer and the Merger and references herein to the
"Transaction" is to the Offer and the Merger as contemplated by the Agreement.
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of shares of Common Stock, taken as a whole (other than
Merger Sub, Parent and its affiliates), of the aggregate Consideration to be
paid pursuant to the Transaction.
In connection with this opinion, we have:
(i) Reviewed the financial terms and conditions of the Agreement dated April
28, 1999;
(ii) Analyzed certain historical business and financial information relating
to the Company;
(iii) Reviewed various financial forecasts and other data provided to us by
the Company relating to its business;
(iv) Held discussions with members of the senior management of the Company
with respect to the business, prospects, and strategic objectives of
the Company;
(v) Reviewed public information with respect to certain other companies in
lines of business we believe to be generally comparable to the business
of the Company;
(vi) Reviewed the financial terms of certain business combinations involving
companies in lines of business we believe to be generally comparable to
those of the Company, and in other industries generally;
(vii) Reviewed the historical stock prices and trading volumes of the Class A
Common Stock; and
(viii) Conducted such other financial studies, analyses and investigations as
we deemed appropriate.
B-1
<PAGE>
[LOGO]
We have relied upon the accuracy and completeness of the foregoing
information, and have not assumed any responsibility for any independent
verification of such information or any independent valuation or appraisal of
any of the assets or liabilities of the Company, or concerning the solvency or
fair value of the Company. With respect to financial forecasts, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of management of the Company. We assume no
responsibility for and express no view as to such forecasts or the assumptions
on which they are based.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. In rendering our opinion, we did not address the Company's
underlying decision to effect the Transaction.
In rendering our opinion, we have assumed that the Transaction will be
consummated on the terms described in the Agreement, without any waiver of any
material terms or conditions by the Company and that obtaining any necessary
regulatory approvals for the Transaction will not have an adverse effect on the
Company.
Lazard Freres & Co. LLC is acting as investment banker to the Company in
connection with the Transaction and will receive a fee for our services, a
substantial portion of which is contingent upon the consummation of the
Transaction. We have in the past provided financial advisory services to the
Company for which we received usual and customary compensation. In addition, the
Company has agreed to indemnify us for certain liabilities that may arise out of
the rendering of this opinion.
Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors and our opinion is rendered to the Company's Board
of Directors in connection with its consideration of the Transaction. This
opinion is not intended to and does not constitute a recommendation to any
holder of Common Stock as to whether such stockholder should vote for the
Transaction or tender their share pursuant to the Offer. It is understood that
this letter may not be disclosed or otherwise referred to without our prior
consent, except as may otherwise be required by law or by a court of competent
jurisdiction.
Based on and subject to the foregoing, we are of the opinion that the
aggregate Consideration to be paid pursuant to the Transaction is fair to the
holders of Common Stock, taken as a whole (other than Parent and its
affiliates), from a financial point of view.
<TABLE>
<S> <C> <C>
Very truly yours,
LAZARD FRERES & CO. LLC
By: /s/ Peter R. Ezersky
-----------------------------------------
Peter R. Ezersky
MANAGING DIRECTOR
</TABLE>
B-2
<PAGE>
<TABLE>
<S> <C> <C>
EXHIBITS
1 Agreement and Plan of Merger, dated as of April 28, 1999, by and among United News &
Media plc, Miller Freeman Worldwide plc, MFW Acquisition Corp. and CMP Media Inc.
2 Tender and Voting Agreement, dated as of April 28, 1999, by and among MFW Acquisition
Corp. and Certain Stockholders of CMP Media Inc.
3 Agreement to Terminate Option Agreement and Stockholders' Agreement and to Amend
Employment Agreement, dated as of April 23, 1999, by and between CMP Media Inc. and
Michael S. Leeds.
4 Agreement to Terminate Option Agreement and Stockholders' Agreement and to Amend
Employment Agreement, dated as of April 23, 1999, by and between CMP Media Inc. and
Daniel H. Leeds.
5 Agreement to Amend Option Agreement, dated as of April 23, 1999, by and between CMP
Media Inc. and Kenneth D. Cron.
6 Letter to Stockholders dated May 6, 1999.
7 Opinion of Lazard Freres & Co. LLC dated April 28, 1999.
8 Press Release issued jointly by United News & Media plc and CMP Media Inc. on April 29,
1999.
</TABLE>
<PAGE>
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
UNITED NEWS & MEDIA PLC,
MILLER FREEMAN WORLDWIDE PLC,
MFW ACQUISITION CORP.,
AND
CMP MEDIA INC.
DATED AS OF APRIL 28, 1999
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
ARTICLE 1A
THE TENDER OFFER
<S> <C> <C>
1A.1 The Offer.......................................................................................2
1A.2 Company Action..................................................................................3
1A.3 Directors.......................................................................................4
ARTICLE 1
THE MERGER
1.1 The Merger......................................................................................5
1.2 The Closing.....................................................................................5
1.3 Effective Time..................................................................................5
ARTICLE 2
CERTIFICATE OF INCORPORATION, BYLAWS, DIRECTORS AND OFFICERS OF
THE SURVIVING CORPORATION
2.1 Certificate of Incorporation of the Surviving Corporation.......................................6
2.2 Bylaws of the Surviving Corporation.............................................................6
2.3 Directors of the Surviving Corporation..........................................................6
2.4 Officers of the Surviving Corporation...........................................................6
ARTICLE 3
EFFECT OF THE MERGER ON CAPITAL STOCK
3.1 Effect on Capital Stock.........................................................................6
3.2 Exchange of Certificates........................................................................8
3.3 Lost, Stolen or Destroyed Certificates..........................................................9
3.4 Dissenting Shares...............................................................................9
3.5 Taking of Necessary Action; Further Action......................................................9
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
4.1 Organization, Existence and Good Standing.......................................................9
4.2 Subsidiaries and Affiliated Partnerships.......................................................10
4.3 Organization, Existence and Good Standing of the Company Subsidiaries
and the Company Other Entities ................................................................10
</TABLE>
-i-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
4.4 Company Capital Stock..........................................................................10
4.5 Power and Authority............................................................................11
4.5A Director Action................................................................................12
4.6 Legal Proceedings..............................................................................12
4.7 No Undisclosed Liabilities.....................................................................12
4.8 Absence of Changes.............................................................................12
4.9 No Violation; Consents and Approvals...........................................................12
4.10 Contracts......................................................................................13
4.11 Compliance With Law; Governmental Authorizations...............................................13
4.12 Insurance......................................................................................13
4.13 Tax Matters....................................................................................13
4.14 Employee Benefit Plans.........................................................................14
4.15 Licenses and Regulatory Approvals..............................................................14
4.16 SEC Filings....................................................................................15
4.17 Title to Properties............................................................................16
4.18 Intellectual Property..........................................................................16
4.19 Commissions and Fees...........................................................................16
4.20 Information....................................................................................16
4.21 Opinion of Financial Advisor...................................................................16
4.22 Company Stockholders' Approval.................................................................17
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT
5.1 Organization, Existence and Capital Stock......................................................17
5.2 Power and Authority............................................................................17
5.3 Legal Proceedings..............................................................................17
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF UNITED AND PARENT
6.1 Organization, Existence and Good Standing......................................................17
6.2 Power and Authority............................................................................18
6.3 Financing......................................................................................18
</TABLE>
-ii-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
6.4 Legal Proceedings..............................................................................18
6.5 No Violation; Consents and Approvals...........................................................18
6.6 Compliance With Law; Governmental Authorizations...............................................19
6.7 Commissions and Fees...........................................................................19
6.8 Information....................................................................................19
6.9 Guaranty by United.............................................................................19
ARTICLE 7
ACCESS TO INFORMATION AND DOCUMENTS
7.1 Access to Information..........................................................................20
7.2 Return of Records..............................................................................20
ARTICLE 8
COVENANTS OF THE COMPANY
8.1 Preservation of Business.......................................................................21
8.2 Material Transactions..........................................................................21
8.3 Meeting of Stockholders........................................................................22
8.4 Accounting Methods.............................................................................23
8.5 No Solicitations...............................................................................23
8.6 Consents.......................................................................................23
ARTICLE 9
COVENANTS OF PARENT AND MERGER SUB
9.1 Employees......................................................................................23
9.2 Indemnification................................................................................24
9.3 Transaction Costs..............................................................................25
ARTICLE 10
COVENANTS OF THE COMPANY, PARENT AND MERGER SUB
10.1 Public Disclosures.............................................................................25
10.2 Other Actions..................................................................................25
10.3 Proxy Statement; Antitrust Filings.............................................................26
10.4 Other Filings and Consents.....................................................................27
</TABLE>
-iii-
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
<TABLE>
<CAPTION>
PAGE
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
<S> <C> <C>
11.1 Termination....................................................................................27
11.2 Effect of Termination..........................................................................28
11.3 Amendment......................................................................................28
11.4 Extension; Waiver..............................................................................29
11.5 Expenses and Fees..............................................................................29
ARTICLE 12
CONDITIONS TO CLOSING
12.1 Mutual Condition...............................................................................29
12.2 Conditions to Obligations of Parent and Merger Sub.............................................29
12.3 Conditions to Obligations of the Company.......................................................30
ARTICLE 13
MISCELLANEOUS
13.1 Nonsurvival of Representations and Warranties..................................................31
13.2 Scope of Representations and Warranties........................................................31
13.3 Notices........................................................................................31
13.4 Further Assurances.............................................................................32
13.5 Governing Law..................................................................................32
13.6 "Knowledge"....................................................................................32
13.7 "Material Adverse Effect"......................................................................33
13.8 "Taxes"........................................................................................33
13.9 Captions.......................................................................................33
13.10 Integration of Company Disclosure Schedule ....................................................33
13.11 Entire Agreement ..............................................................................33
13.12 Amendment .....................................................................................33
13.13 Counterparts ..................................................................................33
13.14 Binding Effect; No Third Party Beneficiaries ..................................................34
13.15 Assignment ....................................................................................34
</TABLE>
-iv-
<PAGE>
AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as
of April 28, 1999, by and among United News & Media plc, an English public
limited company ("United"), Miller Freeman Worldwide plc, an English public
limited company ("Parent"), MFW Acquisition Corp., a Delaware corporation and a
wholly owned affiliate of Parent ("Merger Sub"), and CMP Media Inc., a Delaware
corporation (the "Company").
W I T N E S S E T H:
WHEREAS, the respective Boards of Directors of Parent, Merger Sub and
the Company each have determined that it is in the best interests of their
respective stockholders for Merger Sub to merge with and into the Company upon
the terms and subject to the conditions of this Agreement (the "Merger"), and
such Boards of Directors have approved such Merger, pursuant to which Merger Sub
will make a cash tender offer (the "Offer") to acquire all shares of the
Company's Class A Common Stock, par value $0.01 per share (the "Class A Common
Stock"), and the Company's Class B Common Stock, par value $0.01 per share (the
"Class B Common Stock" and, collectively with the Class A Common Stock, the
"Company Common Stock"), issued and outstanding for $39.00 per share, or such
higher price as may be paid if the Offer is amended, net to the seller in cash
(the "Cash Price");
WHEREAS, also in furtherance thereof, it is proposed that, following
the consummation of the Offer, Merger Sub will merge with and into the Company
and that the Company Common Stock not tendered and accepted pursuant to the
Offer will thereupon be converted into the right to receive the Cash Price;
WHEREAS, the holders of the Company's Class B Common Stock, who
represent in the aggregate at least 90% of the total voting power of the Company
Common Stock, have agreed to tender the Company Common Stock owned by such
holders to Merger Sub in accordance with the Offer and to vote the shares of
Company Common Stock owned by such holders in favor of the Merger subject to the
terms and conditions of a tender and voting agreement (the "Voting Agreement")
to be entered into by such holders concurrently with the execution and delivery
of this Agreement; and
WHEREAS, each of Parent, Merger Sub and the Company desires to make
certain representations, warranties, covenants and agreements in connection with
the Merger and to prescribe various conditions to the Merger.
NOW, THEREFORE, in consideration of the foregoing, and the mutual
representations, warranties, covenants and agreements contained herein, the
parties hereto do hereby agree as follows:
<PAGE>
ARTICLE 1A
THE TENDER OFFER
1A.1 THE OFFER. (a) Provided that this Agreement shall not have been
terminated in accordance with Section 11.1 hereof and none of the events set
forth in Annex I hereto shall have occurred and be existing, Parent shall cause
Merger Sub to, and Merger Sub shall, commence (within the meaning of Rule 13d-2
under the Securities Exchange Act of 1934, as amended (the "Exchange Act")) the
Offer as promptly as practicable, but in no event later than May 6, 1999, and
shall use all reasonable efforts to consummate the Offer. The obligation of
Merger Sub to accept for payment any shares of Company Common Stock tendered
shall be subject to the satisfaction of only those conditions set forth in Annex
I. Merger Sub expressly reserves the right to waive any such condition or to
increase the Cash Price or, subject to Section 1A.1(b), to make other changes in
the terms and conditions of the Offer. The Cash Price shall be net to the seller
in cash, subject to reduction only for any applicable Federal back-up
withholding or stock transfer taxes payable by the seller. The Company agrees
that no shares of Company Common Stock held by the Company will be tendered
pursuant to the Offer. For purposes of this Agreement, Company Common Stock held
by the trust established pursuant to the 1999 Leeds Family/CMP Media Inc.
Employee Benefit Trust Agreement shall not be deemed to be Company Common Stock
held or owned by the Company.
(b) Without the prior written consent of the Company, Merger Sub
shall not (i) decrease the Cash Price or change the form of consideration
payable in the Offer, (ii) decrease the number of shares of Company Common Stock
sought, (iii) amend or waive satisfaction of the Minimum Condition (as defined
in Annex I) or (iv) impose additional conditions to the Offer or amend any other
term of the Offer in any manner adverse to the holders of Company Common Stock;
provided, however, that Merger Sub may extend the expiration date (x) in its
sole discretion from time to time, if on the initial scheduled expiration date
of the Offer which shall be twenty (20) business days after the date the Offer
is commenced, all conditions to the Offer shall not have been satisfied or
waived; or (y) for a period not to exceed ten (10) business days,
notwithstanding that all conditions to the Offer are satisfied as of such
expiration date of the Offer, if, immediately prior to the initial expiration
date of the Offer (as it may be extended), after giving effect to the automatic
conversion of all tendered and not withdrawn shares of Class B Common Stock
pursuant to the certificate of incorporation of the Company, the shares of Class
A Common Stock tendered and not withdrawn pursuant to the Offer equal less than
90% of the outstanding shares of Class A Common Stock and, in either case,
Merger Sub expressly irrevocably waives any condition (other than the Minimum
Condition) that subsequently may not be satisfied during such extension of the
Offer; or (z) for any period required by any rule, regulation or interpretation
of the Securities and Exchange Commission (the "SEC") or the staff thereof
applicable to the Offer. Parent shall cause Merger Sub to, and Merger Sub shall,
on the terms and subject to the prior satisfaction or waiver of the conditions
of the Offer, accept for payment and purchase, as soon as permitted under the
terms of the Offer, all shares of Company Common Stock validly tendered and not
withdrawn prior to the expiration of the Offer as such expiration may be
extended in accordance with Section 1A.1(b).
-2-
<PAGE>
(c) The Offer shall be made by means of an offer to purchase (the
"Offer to Purchase") having only the conditions set forth in Annex I hereto. As
soon as practicable on the date the Offer is commenced, Parent shall cause
Merger Sub to, and Merger Sub shall, file with the SEC a Tender Offer Statement
on Schedule 14D-1 (together with all amendments and supplements thereto, the
"Schedule 14D-1") with respect to the Offer that will comply in all material
respects with the provisions of, and satisfy in all material respects the
requirements of, such Schedule 14D-1 and all applicable Federal securities laws,
and will contain (including as an exhibit) or incorporate by reference the Offer
to Purchase and forms of the related letter of transmittal and summary
advertisement (which documents, together with any supplements or amendments
thereto, and any other SEC schedule or form which is filed in connection with
the Offer and related transactions, are referred to collectively herein as the "
Offer Documents"). Each of Parent, Merger Sub and the Company agrees promptly to
correct any information provided by it for use in the Schedule 14D-1 or the
Offer Documents if and to the extent that such information shall have become
false or misleading in any material respect and to supplement the information
provided by it specifically for use in the Schedule 14D-1 or the Offer Documents
to include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and each of Parent and Merger Sub further agrees to take all
steps necessary to cause the Schedule 14D-1, as so corrected or supplemented, to
be filed with the SEC and the Offer Documents, as so corrected or supplemented,
to be disseminated to holders of Company Common Stock, in each case as and to
the extent required by applicable Federal securities laws. The Company and its
counsel shall be given a reasonable opportunity to review and comment on any
Offer Documents before they are filed with the SEC.
1A.2 COMPANY ACTION. (a) The Company hereby approves of and consents to
the Offer and represents and warrants that its Board of Directors, at a meeting
duly called and held on April 28, 1999, at which all of the Directors were
present, duly approved and adopted this Agreement and the transactions
contemplated hereby, including the Offer and the Merger, recommended that the
stockholders of the Company accept the Offer, tender their Company Common Stock
pursuant to the Offer and approve this Agreement and the transactions
contemplated hereby, including the Merger, and determined that this Agreement
and the transactions contemplated hereby, including the Offer and the Merger,
are fair to and in the best interests of the stockholders of the Company.
(b) The Company shall file with the SEC, as promptly as practicable
after the filing by Merger Sub of the Schedule 14D-1 with respect to the Offer,
a Tender Offer Solicitation/Recommendation Statement on Schedule 14D-9 (together
with any amendments or supplements thereto, the "Schedule 14D-9") that will
comply in all material respects with the provisions of all applicable Federal
securities laws. The Company shall mail such Schedule 14D-9 to the stockholders
of the Company along with the Offer Documents promptly after the commencement of
the Offer. The Schedule 14D-9 and the Offer Documents shall contain the
recommendations of the Board of Directors described in Section 1A.2(a) hereof.
The Company agrees promptly to correct the Schedule 14D-9 if and to the extent
that it shall become false or misleading in any material respect (and Merger
Sub, with respect to written information supplied by it specifically for use in
the Schedule 14D-9, shall promptly notify the Company of any required
corrections of such information and cooperate with the Company with respect to
correcting such information) and to supplement the information contained in the
Schedule 14D-9
-3-
<PAGE>
to include any information that shall become necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading, and the Company shall take all steps necessary to cause the
Schedule 14D-9 as so corrected to be filed with the SEC and disseminated to the
Company's stockholders to the extent required by applicable Federal securities
laws. Merger Sub and its counsel shall be given a reasonable opportunity to
review and comment on the Schedule 14D-9 before it is filed with the SEC.
(c) In connection with the Offer, the Company shall promptly upon
execution of this Agreement furnish Merger Sub with mailing labels containing
the names and addresses of all record holders of Company Common Stock and
security position listings of Company Common Stock held in stock depositories,
each as of a recent date, and shall promptly furnish Merger Sub with such
additional information, including updated lists of stockholders, mailing labels
and security position listings, and such other information and assistance as
Merger Sub or its agents may reasonably request for the purpose of communicating
the Offer to the record and beneficial holders of Company Common Stock.
1A.3 DIRECTORS. (a) Promptly upon the purchase by Merger Sub of shares
of Company Common Stock pursuant to the Offer, and from time to time thereafter
as shares of Company Common Stock are acquired by Merger Sub, Merger Sub shall
be entitled to designate such number of directors, rounded up to the next whole
number, on the Board of Directors as will give Merger Sub, subject to compliance
with Section 14(f) of the Exchange Act, representation on the Board of Directors
equal to at least that number of directors which equals the product of the total
number of directors on the Board of Directors (giving effect to the directors
appointed or elected pursuant to this sentence) multiplied by the percentage
obtained by dividing (i) the aggregate number of votes represented by the shares
of Company Common Stock beneficially owned by Merger Sub or any affiliate of
Merger Sub (including for purposes of this Section 1A.3 such shares of Company
Common Stock as are accepted for payment pursuant to the Offer, but excluding
shares of Company Common Stock held by the Company) by (ii) the number of votes
represented by all shares of Company Common Stock outstanding (excluding Company
Common Stock held by the Company). At such times, if requested by Merger Sub,
the Company will also cause each committee of the Board of Directors to include
persons designated by Merger Sub constituting the same percentage of each such
committee as Merger Sub's designees are of the Board of Directors. The Company
shall, upon request by Merger Sub, promptly increase the size of the Board of
Directors or exercise its best efforts to secure the resignations of such number
of directors as is necessary to enable Merger Sub designees to be elected to the
Board of Directors in accordance with the terms of this Section 1A.3 and shall
cause Merger Sub's designees to be so elected; provided, however, that prior to
the Effective Time (as defined in Section 1.3), the Company's Board of Directors
shall always have at least three members who are neither officers, directors,
stockholders or designees of Parent or Merger Sub or any of their affiliates
("Outside Directors"). If the number of directors who are Outside Directors is
reduced below three for any reason prior to the Effective Time, the remaining
directors who are Outside Directors (or if there is only one director who is an
Outside Director) shall be entitled to designate a person (or persons) to fill
such vacancy (or vacancies) who is an Outside Director and who shall be a
director deemed to be an Outside Director for all purposes of this Agreement.
(b) Subject to applicable law, the Company shall promptly take all
action necessary pursuant to Section 14(f) of the Exchange Act and Rule 14f-1
promulgated thereunder
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in order to fulfill its obligations under this Section 1A.3 and shall include in
the Schedule 14D-9 mailed to stockholders promptly after the commencement of the
Offer (or an amendment thereof or an information statement pursuant to Rule
14f-1 if Merger Sub has not theretofore designated directors) such information
with respect to the Company and its officers and directors as is required under
Section 14(f) and Rule 14f-1 in order to fulfill its obligations under this
Section 1A.3.
(c) From and after the election or appointment of Merger Sub's
designees pursuant to this Section 1A.3 and prior to the Effective Time, any
amendment or termination of this Agreement by the Company, any extension by the
Company of the time for the performance of any of the obligations or other acts
of Parent or Merger Sub or waiver of any of the Company's rights hereunder, or
any other action taken by the Company's Board of Directors in connection with
this Agreement, will require the concurrence of a majority of the directors of
the Company then in office who are Outside Directors.
ARTICLE 1
THE MERGER
1.1 THE MERGER. Subject to the terms and conditions set forth in this
Agreement, and in accordance with the applicable provisions of the Delaware
General Corporation Law (the "DGCL"), Merger Sub shall be merged with and into
the Company at the Effective Time. Following the Effective Time, the separate
corporate existence of Merger Sub shall cease, and the Company shall continue as
the surviving corporation (the "Surviving Corporation") and shall succeed to and
assume all of the rights and obligations of Merger Sub and the Company in
accordance with the DGCL. The effect of the Merger shall be as provided in this
Agreement and under the applicable provisions of the DGCL.
1.2 THE CLOSING. The closing of the Merger (the "Closing") will take
place at 10:00 a.m. Eastern Time on a date to be specified by the parties, or as
soon thereafter as practicable following the satisfaction or waiver of all of
the conditions set forth in Article 12 hereof (the "Closing Date"), at the
offices of the Company, 600 Community Drive, Manhasset, New York 11030, unless
another date or place is agreed to in writing by the parties hereto.
1.3 EFFECTIVE TIME. Subject to the provisions of this Agreement, the
parties shall execute and file with the Secretary of State of the State of
Delaware a certificate of merger (the "Certificate of Merger") in accordance
with the relevant provisions of the DGCL and shall make all other filings or
recordings required under the DGCL as soon as practicable on or after the
Closing Date. The Merger shall become effective at such time as the Certificate
of Merger is duly filed with the Secretary of State of the State of Delaware, or
at such other time as the Company and Parent shall agree should be specified in
the Certificate of Merger (the "Effective Time").
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ARTICLE 2
CERTIFICATE OF INCORPORATION, BYLAWS, DIRECTORS AND OFFICERS OF THE
SURVIVING CORPORATION
2.1 CERTIFICATE OF INCORPORATION OF THE SURVIVING CORPORATION. The
certificate of incorporation of Merger Sub, as in effect immediately prior to
the Effective Time and subject to Section 9.2(a) hereof, shall be the
certificate of incorporation of the Surviving Corporation from and after the
Effective Time and until thereafter amended as provided by law; provided,
however, that the name of the Surviving Corporation to be provided in its
certificate of incorporation shall be "CMP Media Inc."
2.2 BYLAWS OF THE SURVIVING CORPORATION. The Bylaws of Merger Sub, as
in effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation from and after the Effective Time and until thereafter
altered, amended or repealed in accordance with the laws of the State of
Delaware, the certificate of incorporation of the Company and the Bylaws;
provided, however, that the name of the Surviving Corporation to be provided in
its bylaws shall be "CMP Media Inc."
2.3 DIRECTORS OF THE SURVIVING CORPORATION. The Board of Directors of
the Surviving Corporation shall be comprised of the directors of Merger Sub.
2.4 OFFICERS OF THE SURVIVING CORPORATION. The initial executive
officers of the Surviving Corporation shall be those individuals designated by
Parent immediately prior to the Effective Time.
ARTICLE 3
EFFECT OF THE MERGER ON CAPITAL STOCK
3.1 EFFECT ON CAPITAL STOCK. As of the Effective Time, by virtue of the
Merger and without any action on the part of any holder of any shares of Company
Common Stock or any holder of shares of capital stock of Merger Sub:
(a) CAPITAL STOCK OF MERGER SUB. Each issued and outstanding share
of capital stock of Merger Sub shall be converted into and become one fully paid
and nonassessable share of Common Stock, par value $.01 per share, of the
Surviving Corporation.
(b) CANCELLATION OF TREASURY STOCK. Each share of Company Common
Stock that is owned by the Company, by any subsidiary of the Company or by
Merger Sub shall automatically be canceled and retired and shall cease to exist
without payment of any consideration therefor.
(c) CONVERSION OF THE COMPANY SHARES. Each issued and outstanding
share of Company Common Stock (other than shares to be canceled in accordance
with Section 3.1(b)) shall be converted into the right to receive the Cash
Price. Shares of Company Common Stock to be exchanged for cash pursuant to this
Section 3.1(c) shall hereinafter be referred to as the "Exchanging Company
Shares." As of the Effective Time, all of the Exchanging Company
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Shares shall no longer be outstanding and shall automatically be canceled and
retired and shall cease to exist, and each holder of a certificate representing
any Exchanging Company Shares shall cease to have any rights with respect
thereto, except the right to receive the Cash Price to be paid in consideration
therefor upon surrender of such certificate in accordance with Section 3.2,
without interest.
(d) STOCK OPTIONS AND WARRANTS. With respect to all outstanding
options or warrants (referred to collectively as the "Options" and individually
as an "Option") to purchase or to acquire Company Common Stock, a summary of
which is included in Section 4.4 of the Company Disclosure Schedule (as defined
in Section 4.2(a) hereof) (except for any vested or unvested Options held by
Michael S. Leeds or Daniel H. Leeds, which shall be canceled prior to the
expiration date of the Offer without payment therefor (except for any payments
to be made pursuant to their respective employment agreements)), each holder of
an Option which is surrendered by the holder for cancellation shall be entitled
to receive from the Company, immediately prior to and conditioned upon the
closing of the Offer, for each share of Company Common Stock purchasable under
each Option, an amount in cash in full cancellation of such Option equal to the
excess of the Cash Price over the per share exercise price of such Option (or
such greater amount as Merger Sub shall agree in writing), as such amount may be
reduced by any required withholding in accordance with applicable tax laws. The
Company agrees to use all commercially reasonable efforts to obtain prior to the
expiration date of the Offer written agreements of all holders of Options
legally binding such holders to cancellation of such Options consistent with the
foregoing. The Company's Board of Directors will adopt a resolution terminating
the Company's Stock Incentive Plan, the Directors' Stock Compensation Plan, the
1988 Equity Appreciation Plan and the Employee Stock Purchase Plan (the "ESPP")
(collectively, the "Plans"), effective as of the Effective Date; provided,
however, that with respect to the ESPP, the parties agree as follows: (i) the
Company's Board of Directors shall adopt a resolution providing that
participating employees may not make additional contributions under the ESPP for
any period after April 23, 1999 and the participating employees shall be
entitled to purchase Company Common Stock under the ESPP as of the closing of
the Offer only with respect to contributions made through April 23, 1999, (ii)
each participating employee in the ESPP shall be entitled to receive from the
Company, immediately prior to and conditioned upon the closing of the Offer, the
Cash Price for each share of Company Common Stock such employee is entitled to
purchase under the ESPP in full settlement of such employees' rights and
benefits under the ESPP and (iii) the actions set forth in subsections (i) and
(ii) above shall not be deemed to be a violation or breach of any other
provisions of this Agreement.
(e) RECLASSIFICATION, RECAPITALIZATION, etc. If, between the date
of this Agreement and the Effective Time, the outstanding Company Common Stock
shall have been changed into a different number of shares or a different class
by reason of any reclassification, recapitalization, split-up, combination,
exchange of shares or readjustment or other similar transaction with respect to
Company Common Stock, or a stock dividend thereon shall be declared with a
record date within said period, the Cash Price shall be correspondingly
adjusted. The Company covenants and agrees not to take any action referred to in
the preceding sentence.
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3.2 EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Effective Time, Parent shall enter
into an agreement with such bank or trust company as may be designated by Parent
(and which institution otherwise shall be reasonably satisfactory to the
Company) (the "Exchange Agent") which provides that Parent shall deposit with
the Exchange Agent as of the Effective Time, for the benefit of the holders of
Exchanging Company Shares, for exchange in accordance with this Article III,
through the Exchange Agent, cash in an amount sufficient to make cash payments
(being hereinafter referred to as the "Exchange Fund") pursuant to Section 3.1
in exchange for outstanding shares of Company Common Stock.
(b) EXCHANGE PROCEDURES. As soon as reasonably practicable after
the Effective Time, the Surviving Corporation shall cause the Exchange Agent to
deliver to each holder of record of a certificate or certificates which
immediately prior to the Effective Time represented outstanding shares of
Company Common Stock (a "Certificate" or the "Certificates") whose shares were
converted pursuant to Section 3.1, a form of letter of transmittal together with
instructions for use in effecting the surrender of the Certificates for payment
therefor. Upon surrender of a Certificate for cancellation to the Exchange Agent
or to such other agent or agents as may be appointed by Parent, together with
such letter of transmittal, duly executed, and such other documents as may
reasonably be required by the Exchange Agent, the holder of such Certificate
shall be entitled to receive in exchange therefor the Cash Price for each share
of Company Common Stock represented by such Certificate payable pursuant to the
provisions of this Article III, and the Certificate so surrendered shall
forthwith be canceled. In the event of a transfer of ownership of shares of
Company Common Stock which is not registered in the transfer records of the
Company, the appropriate Cash Price may be paid to a person other than the
person in whose name the Certificate so surrendered is registered, if such
Certificate shall be properly endorsed or otherwise be in proper form for
transfer, and the person requesting such payment shall pay any transfer or other
taxes required by reason of the Cash Price payment to a person other than the
registered holder of such Certificate or establish to the satisfaction of Parent
that such tax has been paid or is not applicable. Until surrendered as
contemplated by this Section 3.2, each Certificate shall be deemed at any time
after the Effective Time to represent only the right to receive upon such
surrender the Cash Price payment, as contemplated by this Section 3.2, without
interest.
(c) NO FURTHER OWNERSHIP RIGHTS IN EXCHANGING COMPANY SHARES. If,
after the Effective Time, Certificates are presented to the Surviving
Corporation or the Exchange Agent for any reason, they shall be canceled and
exchanged as provided in this Article III, except as otherwise provided by law.
(d) REQUIRED WITHHOLDING. Each of the Exchange Agent, Parent and
the Surviving Corporation shall be entitled to deduct and withhold from any
consideration payable or otherwise deliverable pursuant to this Agreement to any
holder or former holder of Company Common Stock such amounts as may be required
to be deducted or withheld therefrom under the Internal Revenue Code of 1986, as
amended (the "Code"), or under any applicable provision of state, local or
foreign tax law. To the extent such amounts are so deducted or withheld, such
amounts shall be treated for all purposes under this Agreement as having been
paid to the person to whom such amounts would otherwise have been paid.
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3.3 LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
be authorized to deliver the Cash Price to the holders of record of such lost,
stolen or destroyed Certificates, upon the making of an affidavit of that fact
by the holder thereof; PROVIDED, HOWEVER, that Parent may, in its discretion and
as a condition precedent to the delivery thereof, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
Parent, the Surviving Corporation or the Exchange Agent with respect to the
Certificates alleged to have been lost, stolen or destroyed.
3.4 DISSENTING SHARES. Notwithstanding anything in this Agreement to
the contrary, shares of Company Common Stock outstanding immediately prior to
the Effective Time and held by a holder who has not voted in favor of the Merger
or consented thereto in writing and who has demanded appraisal for such shares
in accordance with Section 262 of the DGCL, if such Section 262 provides for
appraisal rights for such shares in the Merger ("Dissenting Shares"), shall not
be converted into the right to receive the Cash Price as provided in Section
3.1(c), unless and until such holder fails to perfect or withdraws or otherwise
loses his right to appraisal and payment under the DGCL. If, after the Effective
Time, any such holder fails to perfect or withdraws or loses his right to
appraisal, such Dissenting Shares shall thereupon be treated as if they had been
converted as of the Effective Time into the right to receive the Cash Price, if
any, to which such holder is entitled, without interest or dividends thereon.
The Company shall give Parent prompt notice of any demands received by the
Company for appraisal of shares of Company Common Stock and, prior to the
Effective Time, Parent shall have the right to participate in all negotiations
and proceedings with respect to such demands. Prior to the Effective Time, the
Company shall not, except with the prior written consent of Parent, make any
payment with respect to, or settle or offer to settle, any such demands.
3.5 TAKING OF NECESSARY ACTION; FURTHER ACTION. If, at any time after
the Effective Time, any further action is necessary or desirable to carry out
the purposes of this Agreement and to vest the Surviving Corporation with full
right, title and possession to all assets, property, rights, privileges, powers
and franchises of the Company and Merger Sub, the officers and directors of the
Company and Merger Sub will take all such lawful and necessary action, so long
as such action is consistent with this Agreement. Parent shall cause Merger Sub
to perform fully all of its obligations relating to this Agreement and the
transactions contemplated hereby.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Parent and Merger Sub as
follows:
4.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all necessary corporate power to own its
properties and assets and to carry on its business as presently conducted. The
Company is qualified to do business as a foreign corporation in all requisite
jurisdictions, except where failure to so qualify would not have a Material
Adverse Effect (as defined in Section 13.7 hereof) with respect to the Company.
The Company has
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heretofore made available to Parent complete and correct copies of its
certificate of incorporation and bylaws.
4.2 SUBSIDIARIES AND AFFILIATED PARTNERSHIPS.
(a) Section 4.2 of the disclosure schedule prepared and delivered
by the Company to Parent prior to the date hereof (the "Company Disclosure
Schedule") is a list of all subsidiaries (i.e., entities with respect to which
the Company owns at least a majority of the capital stock or other equity
interests) of the Company (individually, a "Company Subsidiary", and
collectively, the "Company Subsidiaries") and their respective jurisdictions of
incorporation or organization.
(b) Also set forth in Section 4.2 of the Company Disclosure
Schedule is a list of all general partnerships in which a general partner is the
Company, a Company Subsidiary or another Company Partnership (individually, a
"Company Partnership" and collectively, the "Company Partnerships"), and any
limited liability company in which the Company, a Company Subsidiary or a
Company Partnership is a member (a "Company LLC") (the Company Partnerships and
the Company LLCs being collectively called the "Company Other Entities") and
their respective jurisdictions of organization.
4.3 ORGANIZATION, EXISTENCE AND GOOD STANDING OF THE COMPANY
SUBSIDIARIES AND THE COMPANY OTHER ENTITIES.
(a) Each Company Subsidiary (i) is a corporation duly organized,
validly existing and in good standing under the laws of its respective
jurisdiction of incorporation or organization; (ii) has all necessary corporate
power to own its properties and assets and to carry on its business as presently
conducted; and (iii) is qualified to do business as a foreign corporation in all
requisite jurisdictions, except where the failure to so qualify would not have a
Material Adverse Effect.
(b) Each Company Partnership has been duly organized and has all
necessary power to own its property and assets and to carry on its business as
presently conducted.
(c) Each Company LLC (i) is a limited liability company validly
formed and in good standing under the laws of its respective state of
organization; (ii) has all necessary power to own its property and assets and to
carry on its business as presently conducted; and (iii) is qualified to do
business as a foreign company in all requisite jurisdictions, except where the
failure to so qualify would not have a Material Adverse Effect.
4.4 COMPANY CAPITAL STOCK.
(a) The Company's authorized capital stock consists of (i)
70,000,000 shares of Common Stock, of which 50,000,000 shares are designated as
Class A Common Stock and 20,000,000 shares are designated as Class B Common
Stock, and (ii) 5,000,000 shares of Preferred Stock, par value $0.01 per share
(the "Company Preferred Stock"). As of April 28, 1999, 12,948,956 shares of
Class A Common Stock were issued and outstanding, 10,152,810 shares of Class B
Common Stock were issued and outstanding, and no shares of Company
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Preferred Stock were issued and outstanding. All of the issued and outstanding
shares of Company Common Stock are duly and validly issued, fully paid and
nonassessable.
(b) The Company has no shares of capital stock reserved for
issuance, except that, as of April 27, 1999, there were 266,311 shares of Class
A Common Stock reserved for issuance upon exercise of options under the
Company's Stock Incentive Plan, 25,827 shares of Class A Common Stock reserved
for issuance under the Directors' Stock Compensation Plan, and 1,446,835 shares
of Class A Common Stock reserved for issuance under the Company's Employee Stock
Purchase Plan. The aggregate number of shares of Company Common Stock employees
will be entitled to purchase under the ESPP with contributions made under the
ESPP through April 23, 1999, as contemplated by Section 3.1(d) hereof, will not
materially exceed 20,418. Since March 31, 1999, the Company has not issued any
shares of capital stock except pursuant to the exercise of options outstanding
as of such date. All shares of the Company Common Stock which may be issued
pursuant to the exercise of outstanding options will be, when issued in
accordance with the respective terms thereof, duly authorized, validly issued,
fully paid and nonassessable. There are no bonds, debentures, notes or other
indebtedness having general voting rights (or convertible into securities having
such rights) of the Company or any Company Subsidiary issued and outstanding.
Except as contemplated by this Agreement, and except for the Company's
obligations under its option plans, there are no outstanding contractual
obligations of the Company to repurchase, redeem, or otherwise acquire any
shares of Company Common Stock. Each of the outstanding shares of capital stock
or interests of each of the Company Subsidiaries and the Company Other Entities
is duly authorized, validly issued, fully paid and nonassessable, and the
Company's shares or interests in the Company Subsidiaries and the Company Other
Entities are owned by the Company or by a Company Subsidiary in each case free
and clear of any lien, claim, option, charge, security interest, limitation,
encumbrance and restriction of any kind, except as set forth in Section 4.4 of
the Company Disclosure Schedule. Section 4.4 of the Company Disclosure Schedule
sets forth a summary description of the number of Options outstanding including
the exercise price for such Options under the Company's Stock Incentive Plan and
the Directors' Stock Compensation Plan.
(c) There is no liability for dividends declared or accumulated but
unpaid with respect to any of the shares of Company Common Stock.
4.5 POWER AND AUTHORITY. The Company has the corporate power to
execute, deliver and perform this Agreement and all agreements and other
documents executed and delivered, or to be executed and delivered, by it
pursuant to this Agreement, and, subject to the satisfaction of the conditions
precedent set forth herein, has taken all action required by its certificate of
incorporation, bylaws or otherwise to authorize the execution, delivery and
performance of this Agreement and such related documents. This Agreement has
been duly executed and delivered by the Company and, assuming this Agreement
constitutes a valid and binding obligation of Parent and Merger Sub, as the case
may be, constitutes a valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms except that the enforcement
hereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance or other similar laws now or hereafter in effect relating
to creditors' rights generally and (b) general principles of equity (regardless
of whether enforceability is considered in a proceeding in equity or at law).
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4.5A DIRECTOR ACTION. The Board of Directors of the Company (at a
meeting duly called and held) has by the unanimous vote of all directors present
(i) determined that the Offer and the Merger are advisable and fair to and in
the best interests of the Company and its stockholders; (ii) approved the Merger
in accordance with the provisions of Section 251 of the DGCL; (iii) recommended
the approval of this Agreement, the tender of all Company Common Stock pursuant
to the Offer, and the approval of the Merger by the holders of Company Common
Stock and directed that the Merger be submitted for consideration by the
stockholders of the Company; and (iv) approved the Voting Agreement in
accordance with Section 203 of the DGCL.
4.6 LEGAL PROCEEDINGS. Except as set forth in Section 4.6 of the
Company Disclosure Schedule, there is no litigation, arbitration, governmental
investigation or other proceeding pending or, to the knowledge of the Company,
threatened against the Company, the Company Subsidiaries, the Company Other
Entities, or any of their properties or businesses, or the transactions
contemplated by this Agreement.
4.7 NO UNDISCLOSED LIABILITIES. Except as disclosed in Section 4.7 of
the Company Disclosure Schedule, as of the date hereof, none of the Company, the
Company Subsidiaries or the Company Other Entities has any liabilities or
obligations, whether accrued, absolute or contingent, other than (a) liabilities
and obligations that are fully reflected, accrued or reserved for in the
Company's consolidated balance sheet as of December 31, 1998 and (b) obligations
incurred in the ordinary course of business and consistent with past practice
since the date of such consolidated balance sheet.
4.8 ABSENCE OF CHANGES. Since December 31, 1998, there has been no
change in the financial condition, results of operation, assets, liabilities or
business of the Company, the Company Subsidiaries or the Company Other Entities
which, individually or in the aggregate, would have a Material Adverse Effect
with respect to the Company.
4.9 NO VIOLATION; CONSENTS AND APPROVALS.
(a) Except as set forth in Section 4.9 of the Company Disclosure
Schedule, neither the execution and delivery of this Agreement by the Company
nor the consummation by the Company of the transactions contemplated hereby will
(a) violate, conflict with or result in any breach of any provisions of the
respective organizational documents of the Company, the Company Subsidiaries or
the Company Other Entities, (b) violate any order, injunction, judgment, ruling,
law or regulation of any court or governmental authority applicable to the
Company, the Company Subsidiaries or the Company Other Entities, or (c) conflict
with or result in a breach of any provision of, or constitute a default (or an
event which, with notice or lapse of time or both, would constitute a default),
require any third party consent or give rise to any third party right of
termination, purchase or sale under (i) any agreement, contract or other
instrument binding upon the Company, the Company Subsidiaries or the Company
Other Entities or (ii) any license, franchise, permit or other similar
authorization held by the Company, the Company Subsidiaries or the Company Other
Entities, except, with respect to clause (c) above, for violations, conflicts,
defaults, losses and other matters referred to in such clause which, in the
aggregate, would not have a Material Adverse Effect on the Company.
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(b) Neither the execution and delivery of this Agreement by the
Company nor the consummation by the Company of the transactions contemplated
hereby will require any material consent, waiver, approval, authorization or
permit of, or registration or filing with or notification to (any of the
foregoing being a "Consent"), any governmental or regulatory authority, agency,
commission or tribunal, domestic or foreign (a "Governmental Entity"), except
for (i) compliance with any applicable requirements of the Exchange Act, (ii)
the filing of the Certificate of Merger pursuant to the DGCL, (iii) compliance
with applicable state takeover statutes, (iv) compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (v) Consents required from any foreign Governmental Entity as a result of
the status of Parent or Merger Sub, and (vi) the Schedule 14D-1 and Schedule
14D-9 filings contemplated hereby.
4.10 CONTRACTS. Except as set forth in Section 4.10 of the Company
Disclosure Schedule, each of the material contracts and agreements to which the
Company, the Company Subsidiaries or the Company Other Entities is a party or by
which any of its assets or operations may be bound is in full force and effect
in all material respects, and there are no existing material defaults with
respect to such material contracts and agreements by the Company, the Company
Subsidiaries or the Company Other Entities. The Company has heretofore made
available to Parent complete and correct copies of all such material contracts
and agreements.
4.11 COMPLIANCE WITH LAW; GOVERNMENTAL AUTHORIZATIONS. The Company, the
Company Subsidiaries and the Company Other Entities have operated their
respective businesses in compliance in all material respects with applicable law
and are not in material violation of any order, injunction, judgment, ruling,
law or regulation of any court or governmental authority applicable to the
Company, the Company Subsidiaries or the Company Other Entities.
4.12 INSURANCE. Section 4.12 of the Company Disclosure Schedule lists
all material insurance policies covering the assets, employees and operations of
the Company and the Company Subsidiaries as of the date hereof, showing the
insurers, limits, type of coverage, annual premiums, deductibles and expiration
dates. All such policies are in full force and effect.
4.13 TAX MATTERS. The Company, or a representative of the Company on
its behalf, has duly and timely filed (including within any applicable extension
period) with the appropriate federal, state, local and foreign taxing
authorities all material tax returns which are required to be filed by the
Company or the Company Subsidiaries. The Company and the Company Subsidiaries
have paid all material Taxes (as defined in Section 13.8 hereof) due, other than
Taxes appropriate reserves for which have been made in the Company's financial
statements (and, to the extent material, such reserves have been accurately
described in the Company SEC Reports (as defined in Section 4.16)). There are no
material assessments or adjustments that have been asserted in writing against
the Company or the Company Subsidiaries for any period for which the Company has
not made appropriate reserves in the Company's financial statements included in
the Company SEC Reports. There are no material "deferred intercompany
transactions" or "intercompany transactions" the gain or loss in which has not
yet been taken into account under the consolidated return Treasury Regulations
currently or previously in effect. There are no liens for Taxes on the assets of
the Company or any of the Company Subsidiaries, except for statutory liens for
current Taxes not yet due and payable (and except for liens which do not and
would not, individually or in the aggregate, have a Material Adverse Effect on
the
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Company). Except as set forth in Section 4.13 of the Company Disclosure
Schedule, the Company has not received written notice of any action, suit,
proceeding, audit, claim, deficiency or assessment pending with respect to any
material Taxes of the Company or the Company Subsidiaries.
4.14 EMPLOYEE BENEFIT PLANS.
(a) Except as set forth in Section 4.14(a) of the Company
Disclosure Schedule, the Company neither has established nor maintains nor is
obligated to make contributions to or under or otherwise participate in (i) any
bonus or other type of incentive compensation plan, program, agreement, policy,
commitment, contract or arrangement (whether or not set forth in a written
document), except for annual incentive compensation plans entered into in the
ordinary course of business on an individualized basis as part of the regular
compensation packages made available to salespersons and certain other Company
employees, (ii) any pension, profit-sharing, retirement or similar plan, program
or arrangement, or (iii) any other employee benefit plan, fund or program,
including, but not limited to, those described in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended, and the rules and
regulations promulgated thereunder ("ERISA"). All such plans (individually, a
"Plan" and collectively, the "Plans") have been operated and administered in all
material respects in accordance with, as applicable, ERISA, the Code, Title VII
of the Civil Rights Act of 1964, as amended, the Equal Pay Act of 1967, as
amended, the Age Discrimination in Employment Act of 1967, as amended, and the
related rules and regulations adopted by those federal agencies responsible for
the administration of such laws. No act or failure to act by the Company has
resulted in a "prohibited transaction" (as defined in ERISA) with respect to the
Plans that is not subject to a statutory or regulatory exception. No "reportable
event" (as defined in ERISA) has occurred with respect to any of the Plans which
is subject to Title IV of ERISA other than an event for which the 30-day notice
thereof has been waived by regulation. The Company has not previously made, is
not currently making and is not obligated in any way to make any contributions
to any multi-employer plan within the meaning of the Multi-Employer Pension Plan
Amendments Act of 1980.
(b) Except as disclosed in Section 4.14(b) of the Company
Disclosure Schedule, the Company is not a party to any oral or written (i) union
or collective bargaining agreement, (ii) agreement with any executive officer or
other key employee the benefits of which are contingent, or the terms of which
are materially altered, upon the occurrence of a transaction of the nature
contemplated by this Agreement and which provides for the payment of in excess
of $100,000, or (iii) agreement or plan, including any stock option plan, stock
appreciation rights plan, restricted stock plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of the benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement. Section 9.3 of the Company Disclosure Schedule contains a reasonably
accurate estimate of the bonuses, benefits, fees and costs described in Section
9.3 of this Agreement.
4.15 LICENSES AND REGULATORY APPROVALS. The Company Subsidiaries and
the Company Other Entities hold all material licenses, permits and other
regulatory approvals which are needed or required by law with respect to their
businesses and operations, as they are
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currently or presently conducted (collectively, the "Licenses"). All such
Licenses are in full force and effect, and the Company is in compliance in all
material respects with all conditions and requirements of the Licenses and with
all rules and regulations relating thereto. Any and all past litigation
concerning Licenses and all claims and causes of action raised therein have been
finally adjudicated. No such License has been revoked, conditioned (except as
may be customary) or restricted and no action (equitable, legal or
administrative), arbitration or other process is pending, or to the Company's
knowledge, threatened in writing which in any way challenges the validity of, or
seeks to revoke, condition or restrict any such License.
4.16 SEC FILINGS.
(a) The Company has filed all forms, reports and documents
required to be filed by the Company with the SEC since July 24, 1997 and has
made available to Parent such forms, reports and documents in the form filed
with the SEC. All such required forms, reports and documents (including those
that the Company may file subsequent to the date hereof), as amended, are
referred to herein as the "Company SEC Reports." As of their respective dates,
the Company SEC Reports (i) were prepared in accordance and complied in all
material respects with the requirements of the Securities Act of 1933, as
amended (the "Securities Act"), or the Exchange Act, as the case may be, and the
rules and regulations of the SEC thereunder applicable to such Company SEC
Reports and (ii) did not at the time they were filed contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading. None of
the Company Subsidiaries or Company Other Entities is required to file any
forms, reports or other documents with the SEC.
(b) Each of the audited consolidated balance sheets of the Company
as of December 31, 1997 and 1998, and the consolidated statements of earnings,
stockholders' equity and cash flows of the Company for each of the years in the
three-year period ended December 31, 1998 (including, in each case, any related
notes thereto) contained in the Company SEC Reports (i) complied as to form in
all material respects with the published rules and regulations of the SEC with
respect thereto, (ii) was prepared in accordance with generally accepted
accounting procedures ("GAAP") (applied on a consistent basis except as
disclosed in the notes thereto), and (iii) fairly presented in all material
respects the consolidated financial position of the Company and its consolidated
subsidiaries as at the respective dates thereof and the consolidated results of
the operations and cash flows of the Company and its consolidated subsidiaries
for the periods indicated. As of March 31, 1999, the Company and its
consolidated subsidiaries (the "Consolidated Group") had cash and cash
equivalents (including investments) of $23,908,503 (inclusive of 53,403 shares
of RealNetworks, Inc. stock at a carrying value of $6,522,711). On April 21,
1999, CMP sold its entire holdings of RealNetworks, Inc. stock for $9,965,014.
Between March 31, 1999 and the date hereof the Consolidated Group has not
expended cash outside the ordinary course of its business, and the Company
covenants and agrees that until the consummation of the Offer the Consolidated
Group will not expend cash outside of the ordinary course of business other than
for those expenses relating to or resulting from the transactions contemplated
hereby (a reasonably accurate estimate of the amounts of such expenditures being
included in Section 9.3 of the Company Disclosure Schedule).
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4.17 TITLE TO PROPERTIES. The Company and each of the Company
Subsidiaries has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of its tangible properties and
assets, real, personal and mixed, used or held for use in its business, free and
clear of any liens, pledges, charges, security interests or other encumbrances
of any sort ("Liens") except for Liens imposed by law in respect of obligations
not yet due which are owed in respect of taxes or which otherwise are owed to
carriers, warehousepersons or laborers, except as reflected in the Company
Financial Statements and except for such Liens or other imperfections of title
and encumbrances, if any, which would not have, individually or in the
aggregate, a Material Adverse Effect with respect to the Company.
4.18 INTELLECTUAL PROPERTY. The Company, directly or indirectly, owns,
or is licensed or otherwise possesses rights to use, all patents, trademarks,
trade names, service marks, copyrights and any applications therefor,
technology, know-how and tangible or intangible proprietary information that are
material to the business of the Company and the Company Subsidiaries as
currently conducted by the Company or the Company Subsidiaries, except where the
failure to own, license or possess such rights would not have, individually or
in the aggregate, a Material Adverse Effect with respect to the Company.
4.19 COMMISSIONS AND FEES. Except for fees payable to Lazard Freres &
Co. LLC, ("Lazard Freres") which fees and expenses are reflected in its
agreements with the Company, the Company has not employed any investment banker,
broker, finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any investment
banking, brokerage, finder's or similar fees or commissions in connection with
this Agreement or the transactions contemplated hereby.
4.20 INFORMATION. None of the information supplied by the Company in
writing specifically for inclusion or incorporation by reference in (i) the
Proxy Statement (as defined in Section 10.3) or the Schedule 14D-1 and Schedule
14D-9 filings contemplated hereby, or (ii) any other document to be filed with
the SEC or other Governmental Entity in connection with the transactions
contemplated by this Agreement (the "Governmental Filings"), will, at the
respective times filed with the SEC or other Governmental Entity or, in the case
of the Proxy Statement, at the date it or any amendment or supplement is mailed
to stockholders, at the time of the Special Meeting (as defined in Section 8.3)
or at the Effective Time, contain any untrue statement of a material fact or
omit to state any material fact required to be stated therein or necessary in
order to make the statements made therein, in light of the circumstances under
which they were made, not misleading. The Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder, except that no representation is made by the Company
with respect to statements made therein based on information supplied by Parent
or Merger Sub in writing specifically for inclusion in the Proxy Statement.
4.21 OPINION OF FINANCIAL ADVISOR. The Company has received the written
opinion of Lazard Freres to the effect that the Cash Price is fair to the
holders of the Company Common Stock from a financial point of view.
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4.22 COMPANY STOCKHOLDERS' APPROVAL. The affirmative vote of
stockholders of the Company required for approval and adoption of this Agreement
and the Merger is a majority of the outstanding shares of Company Common Stock
entitled to vote thereon.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF MERGER SUB AND PARENT
Merger Sub and Parent, jointly and severally, hereby represent and
warrant to the Company as follows:
5.1 ORGANIZATION, EXISTENCE AND CAPITAL STOCK. Merger Sub is a
corporation duly organized and validly existing and is in good standing under
the laws of the State of Delaware. The authorized capital of Merger Sub consists
of 1,000 shares of common stock, par value $.01 per share (the "Merger Sub
Common Stock"), all of which shares are issued and registered in the name of
Parent.
5.2 POWER AND AUTHORITY. Merger Sub has corporate power to execute,
deliver and perform this Agreement and all agreements and other documents
executed and delivered, or to be executed and delivered, by it pursuant to this
Agreement, and, subject to the satisfaction of the conditions precedent set
forth herein, has taken all actions required by law, its certificate of
incorporation, its bylaws or otherwise to authorize the execution and delivery
of this Agreement and such related documents. The execution and delivery of this
Agreement do not and, subject to the receipt of required stockholder and
regulatory approvals and any other required third-party consents or approvals,
the consummation of the Merger contemplated hereby will not, violate any
provisions of the certificate of incorporation or bylaws of Merger Sub, or any
provision of, or result in the acceleration of any obligation under, any
mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment
or decree to which Merger Sub is a party or by which it is bound, violate any
restrictions of any kind to which Merger Sub is subject, or result in the
creation of any lien, charge or encumbrances upon any of the property or assets
of Merger Sub. The execution and delivery of this Agreement have been approved
by the Board of Directors and by the sole stockholder of Merger Sub.
5.3 LEGAL PROCEEDINGS. There are no actions, suits or proceedings
pending or threatened against Merger Sub, at law or in equity, relating to or
affecting Merger Sub, including relating to the Merger. Merger Sub does not know
or have any reasonable grounds to know of any justification for any such action,
suit or proceeding.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF UNITED AND PARENT
United and Parent, jointly and severally, hereby represent and warrant
to the Company as follows:
6.1 ORGANIZATION, EXISTENCE AND GOOD STANDING. United is a public
limited company duly organized and validly existing and is in good standing
under the laws of England. Parent is a public limited company duly organized and
validly existing and is in good standing under the
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laws of England. Each of United and Parent has all necessary corporate power to
own its properties and assets and to carry on its business as presently
conducted. Each of United and Parent is duly qualified to do business and is in
good standing in all jurisdictions in which the character of the property owned,
leased or operated or the nature of the business transacted by it makes
qualification necessary, except where the failure to so qualify would not have a
Material Adverse Effect with respect to United or Parent, as appropriate.
6.2 POWER AND AUTHORITY. Each of United and Parent has corporate power
to execute, deliver and perform this Agreement and all agreements and other
documents executed and delivered, or to be executed and delivered, by it
pursuant to this Agreement, and, subject to the satisfaction of the conditions
precedent set forth herein has taken all actions required by law, its
certificate of incorporation, its bylaws or otherwise to authorize the execution
and delivery of this Agreement and such related documents. The execution and
delivery of this Agreement do not and, subject to the receipt of required
stockholder and regulatory approvals and any other required third-party consents
or approvals, the consummation of the Merger contemplated hereby will not,
violate any provisions of the organizational documents of United or Parent, or
any provision of, or result in the acceleration of any obligation under, any
mortgage, lien, lease, agreement, instrument, order, arbitration award, judgment
or decree to which United or Parent is a party or by which it is bound, violate
any restrictions of any kind to which United or Parent is subject or result in
the creation of any lien, charge or encumbrance upon any of the property or
assets of United or Parent. The execution and delivery of this Agreement have
been approved by the Board of Directors of United and Parent. This Agreement has
been duly executed and delivered by United, Parent and Merger Sub and, assuming
this Agreement constitutes a valid and binding obligation of the Company,
constitutes a valid and binding obligation of United, Parent and Merger Sub,
enforceable against United, Parent and Merger Sub in accordance with its terms
except that the enforcement hereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding in equity or at law).
6.3 FINANCING. United presently has and, as of the date of the
consummation of the Offer and the Closing Date, as appropriate, will have
delivered to Parent or Merger Sub, cash or cash equivalents on hand in an amount
sufficient to enable Parent or Merger Sub to pay in cash the full amount of the
Cash Price to each holder of shares tendered and not withdrawn pursuant to the
Offer and to each holder of Exchanging Company Shares and consummate the
transactions contemplated hereby.
6.4 LEGAL PROCEEDINGS. There is no litigation, governmental
investigation or other proceeding pending or, so far as is known to United or
Parent, threatened against United or Parent, its respective properties or
business, or the transactions contemplated by this Agreement which would have a
Material Adverse Effect with respect to United or Parent or the transactions
contemplated hereby.
6.5 NO VIOLATION; CONSENTS AND APPROVALS .
(a) Neither the execution and delivery of this Agreement nor the
consummation by United or Parent of the transactions contemplated hereby will
(a) violate,
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conflict with or result in any breach of any provision of the organizational
documents of United or Parent, (b) violate any order, injunction, judgment,
ruling, law or regulation of any court or governmental authority applicable to
United or Parent, or (c) conflict with or result in a breach of any provision
of, or constitute a default (or an event which, with notice or lapse of time or
both, would constitute a default) under (i) any agreement, contract or other
instrument binding upon United or Parent or (ii) any license, franchise, permit
or other similar authorization held by United or Parent, except, with respect to
clauses (b) or (c) above, for violations, conflicts, defaults, losses and other
matters referred to in such clauses which, in the aggregate, would not have a
Material Adverse Effect on Parent or would not materially impair United's or
Parent's ability to consummate the transactions contemplated by this Agreement.
(b) Neither the execution and delivery of this Agreement by United
or Parent or Merger Sub nor the consummation by United, Parent or Merger Sub of
the transactions contemplated hereby will require any Consent of any
Governmental Entity, except for (i) compliance with any applicable requirements
of the Exchange Act, (ii) the filing of the Certificate of Merger pursuant to
the DGCL, (iii) compliance with applicable state takeover statutes, (iv)
compliance with the HSR Act, and (v) the Schedule 14D-1 and Schedule 14D-9
filings contemplated hereby.
6.6 COMPLIANCE WITH LAW; GOVERNMENTAL AUTHORIZATIONS. Each of United
and Parent has operated its business in compliance with applicable law and is
not in violation of any order, injunction, judgment, ruling, law or regulation
of any court or governmental authority applicable to United or Parent except
where such failure to comply or violation would not have a Material Adverse
Effect with respect to United or Parent.
6.7 COMMISSIONS AND FEES. Except for fees payable to Allen & Company
Incorporated, which fees and expenses are reflected in their agreements with
Parent, neither United nor Parent has employed any investment banker, broker,
finder, consultant or intermediary in connection with the transactions
contemplated by this Agreement which would be entitled to any investment
banking, brokerage, finder's or similar fees or commissions in connection with
this Agreement or the transactions contemplated hereby.
6.8 INFORMATION. None of the information supplied or to be supplied by
United, Parent and Merger Sub in writing specifically for inclusion in (i) the
Proxy Statement or the Schedule 14D-1 and Schedule 14D-9 filings contemplated
hereby or (ii) the Governmental Filings will, at the respective times filed with
the SEC or such other Governmental Entity or, in the case of the Proxy
Statement, at the date it or any amendment or supplement is mailed to
stockholders, at the time of the Special Meeting or at the Effective Time,
contains any untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary in order to make the statements
made therein, in light of the circumstances under which they were made, not
misleading.
6.9 GUARANTY BY UNITED. Subject to the provisions of this Section 6.9,
United hereby fully, unconditionally and irrevocably guarantees to the Company
the due and punctual payment of the Cash Price in connection with the Offer and
the Merger and any other monetary obligations of Parent or Merger Sub and the
due and punctual performance of all other obligations of Parent or Merger Sub to
the Company, all in accordance with the terms of this
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Agreement. United hereby acknowledges that, with respect to all of the
obligations of Parent or Merger Sub, including those to pay the Cash Price in
connection with the Offer and the Merger, this guaranty shall be a guaranty of
payment and performance and shall not be conditioned or contingent upon the
pursuit of any remedies against Parent or Merger Sub. United hereby waives
diligence, demand of payment, filing of claims with a court in the event of
merger or bankruptcy of Parent or Merger Sub, any right to require a proceeding
first against Parent or Merger Sub, the benefit of discussion, protest or notice
and all demands whatsoever, and covenants that this guaranty will not be
discharged as to any obligation except by satisfaction of such obligation in
full. To the fullest extent permitted by applicable law, the obligations of
United hereunder shall not be affected by (a) the failure of the Company to
assert any claim or demand or to enforce any right or remedy against United
pursuant to the provisions of this Agreement or otherwise, and (b) any change in
the existence (corporate or otherwise) of Parent or Merger Sub or any
insolvency, bankruptcy, reorganization or similar proceeding affecting any of
them or their assets. United acknowledges that it will receive direct and
indirect benefits from the consummation of the transactions contemplated by this
Agreement and that the waivers set forth in this Section 6.9 are knowingly made
in contemplation of such benefits. Nothing contained in this Section 6.9 is
intended to or shall impair, as between United and the Company, the obligations
of United which are absolute and unconditional, upon failure by either of Parent
or Merger Sub, to perform its respective obligations under this Agreement,
including, without limitation, its obligation to pay the Cash Price in
connection with the Offer and the Merger and any other monetary obligations of
Parent or Merger Sub when payable in accordance with the terms of this
Agreement, nor shall anything herein prevent the Company from exercising all
remedies otherwise permitted by applicable law.
ARTICLE 7
ACCESS TO INFORMATION AND DOCUMENTS
7.1 ACCESS TO INFORMATION. Between the date hereof and the Closing
Date, each of the Company and Parent will give to the other party and its
counsel, accountants and other representatives full access to all the
properties, documents, contracts, personnel files and other records of such
party (and, in the case of the Company, the Company Subsidiaries and the Company
Other Entities) and shall furnish the other party with copies of such documents
and with such information with respect to the affairs of such party as the other
party may from time to time reasonably request. Each party will disclose and
make available to the other party and its representatives all books, contracts,
accounts, personnel records, papers, records, communications with regulatory
authorities and other documents relating to the business and operations of such
party (and, in the case of the Company, the Company Subsidiaries and the Company
Other Entities). All information disclosed by or on behalf of the Company shall
be deemed to be "Evaluation Material" under the terms of the letter agreement,
dated February 19, 1999, between the Company (or its agent, Lazard Freres) and
United (the "Confidentiality Agreement").
7.2 RETURN OF RECORDS. If the transactions contemplated hereby are not
consummated and this Agreement terminates, each party agrees to promptly return
all documents, contracts, records or properties of the other party and all
copies thereof furnished pursuant to this Article 7 or otherwise.
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ARTICLE 8
COVENANTS OF THE COMPANY
8.1 PRESERVATION OF BUSINESS. Between the date hereof and the Effective
Time, the Company will use all commercially reasonable efforts to preserve the
business organization of the Company intact and to preserve for Parent and the
Surviving Corporation the good will of the suppliers, customers and others
having business relations with the Company.
8.2 MATERIAL TRANSACTIONS. Between the date hereof and the Effective
Time, the Company will not (other than as required pursuant to the terms of this
Agreement and the related documents or with respect to transactions described in
Section 8.2 of the Company Disclosure Schedule which do not vary materially from
the terms set forth on such Section 8.2, and will not permit any Company
Subsidiary or Company Other Entity to, without first obtaining the written
consent of Parent, enter into any transactions outside of the ordinary course of
business of the Company or:
(a) encumber any asset or enter into any transaction or make any
contract or commitment relating to the properties, assets and business of the
Company or any Company Subsidiary or Company Other Entity, other than in the
ordinary course of business or as otherwise disclosed herein;
(b) enter into any employment contract which is not terminable at
will or upon notice of 30 days or less and without penalty to the Company or any
Company Subsidiary or Company Other Entity except as provided herein;
(c) issue or sell, or agree to issue or sell, any shares of capital
stock or other securities of the Company, except upon exercise of currently
outstanding stock options or warrants;
(d) except as set forth in Section 8.2(d) of the Company Disclosure
Schedule or as may be required to comply with applicable law, become obligated
under any new pension plan, welfare plan, multi-employer plan, employee benefit
plan, severance plan, benefit arrangement or similar plan or arrangement which
is not in existence on the date hereof, or amend any such plan or arrangement in
existence on the date hereof if such amendment would have the effect of
materially increasing the costs thereof to the Company or any of its affiliates;
(e) declare, set aside or pay any dividend or other distribution
(whether in cash, securities or property or any combination thereof) in respect
of any class or series of its capital stock other than between the Company and
any of its wholly owned subsidiaries;
(f) split, combine, subdivide, reclassify or redeem, purchase or
otherwise acquire, or propose to redeem, purchase or otherwise acquire, any
shares of its capital stock, or any of its other securities;
(g) (i) incur, assume or pre-pay any long-term debt or incur or
assume any short-term debt, except that the Company and the Company Subsidiaries
may incur, assume or pre-pay debt in the ordinary course of business consistent
with past practice under existing lines
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of credit, (ii) assume, guarantee, endorse or otherwise become liable or
responsible (whether directly, contingently or otherwise) for the obligations of
any other person or entity except in the ordinary course of business, or (iii)
make any loans, advances or capital contributions to, or investments in, any
other person or entity except in the ordinary course of business and except for
loans, advances or capital contributions to or investments in any wholly owned
subsidiary of the Company;
(h) issue any stock option under any Plan or any other options,
warrants, convertible securities or other capital stock, and (except as
contemplated by Section 3.1(d) hereof) will not accelerate the vesting or
otherwise modify the terms of any option outstanding under any Plan;
(i) take any action to institute any severance or termination pay
practices with respect to any directors, officers, or employees of the Company
or any of the Company Subsidiaries or Company Other Entities other than those in
effect on the date hereof, or to increase the benefits payable under its
severance or termination pay practices in effect on the date hereof;
(j) adopt or amend, in any material respect, except as may be
required by applicable law or regulation, any collective bargaining, bonus,
profit sharing, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment or other employee benefit plan,
agreement, trust, fund, plan or arrangement for the benefit or welfare of any
directors, officers or employees of the Company, or any of the Company
Subsidiaries or Company Other Entities, or make any increase in the salaries,
compensation or pay scales of any such directors, officers or employees; or
(k) amend its certificate of incorporation or bylaws.
From the date of this Agreement through the Effective Time, the Company
will permit two designated representatives of Parent to be present on a
full-time basis at the principal offices of the Company to observe the conduct
of the business of the Company, and the Company will consult with such
representatives prior to taking any actions outside the ordinary course of the
Company's business in any material respect or any actions specified in Section
8.2.
8.3 MEETING OF STOCKHOLDERS.
(a) The Company, as soon as practicable after consummation of the
Offer, if a special meeting of Stockholders is required, will take all steps
necessary in accordance with its certificate of incorporation and bylaws to
call, give notice of, convene and hold a meeting of its stockholders (the
"Special Meeting") for the purpose of approving this Agreement and for such
other purposes as may be necessary or to seek to cause such action to be taken
by written consent to the extent permitted by the DGCL. Unless this Agreement
shall have been validly terminated as provided herein, the Board of Directors of
the Company, subject to its fiduciary duties, will (i) recommend to Company
stockholders the approval of this Agreement, the transactions contemplated
hereby and any other matters to be submitted to the stockholders in connection
therewith, to the extent that such approval is required by applicable law in
order to consummate
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the Merger, and (ii) use commercially reasonable, good faith efforts to obtain
the approval by Company stockholders of this Agreement and the transactions
contemplated hereby.
(b) Nothing contained herein shall affect the right of the Company
or its stockholders to take action by written consent in lieu of meeting to the
extent permitted by law and the certificate of incorporation and bylaws of the
Company.
8.4 ACCOUNTING METHODS. Prior to the Effective Time, the Company shall
not change, in any material respect, its methods of accounting in effect at its
most recent fiscal year end, except as required by changes in GAAP as concurred
in by the Company's independent accountants.
8.5 NO SOLICITATIONS. The Company agrees that, prior to the Effective
Time, it shall not, directly or indirectly, solicit, initiate or encourage any
inquiries or the making of any proposal with respect to any merger,
consolidation or other business combination involving the Company or the Company
Subsidiaries or acquisition of all or substantially all of the assets or capital
stock of the Company and the Company Subsidiaries taken as a whole (an
"ACQUISITION TRANSACTION") or negotiate, explore or otherwise engage in
substantive discussions with any person (other than Parent, Merger Sub or their
respective directors, officers, employees, agents and representatives) with
respect to any Acquisition Transaction or enter into any agreement, arrangement
or understanding requiring it to abandon, terminate or fail to consummate the
Merger or any other transactions contemplated by this Agreement.
8.6 CONSENTS. The Company shall obtain, no later than the date that is
twenty business days after the date hereof, all requisite consents to the
execution, delivery or performance by the Company of this Agreement from Fleet
National Bank or any other requisite lenders in connection with that certain
Credit Agreement, dated as of July 15, 1993, as amended, among the Company,
Fleet National Bank and The Chase Manhattan Bank and that certain Amended and
Restated Negative Pledge Agreement.
ARTICLE 9
COVENANTS OF PARENT AND MERGER SUB
9.1 EMPLOYEES.
(a) As of and after the Effective Time for a period of at least
three years, Parent shall cause the Surviving Corporation to provide to all
officers and employees of the Company, the Company Subsidiaries and the Company
Other Entities (individually, a "Company Employee" and collectively, the
"Company Employees") such retirement benefits, group health plan benefits,
employee benefit plans, programs, arrangements and policies as are no less
favorable, in the aggregate (rather than on an individual plan by plan basis),
than Parent provides to similarly situated employees; provided, however, that
Parent shall cause the Surviving Corporation, to the extent legally permitted,
to maintain and provide to the Company Employees through at least December 31,
1999 those particular employee benefit plans, programs, arrangements and
policies specified in Section 9.1(a) of the Company Disclosure Schedule or plans
substantially similar thereto. Parent shall take all actions required so that
each current and
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former Company Employee will receive credit for his or her service as credited
by the Company prior to the Effective Time (whether for service with the Company
or any predecessor in interest thereto or pursuant to obligations assumed by the
Company in connection with the prior acquisition of assets or capital stock of
other persons or entities) under any employee benefit plans, programs,
arrangements and policies established, maintained, continued or made available
by the Surviving Corporation in which any such current or former Company
Employee is eligible to participate. As soon as practicable after the execution
of this Agreement, Parent shall confer with the Company in good faith to agree
upon mutually acceptable employee benefit and compensation arrangements to be
made available hereunder to the Company Employees.
(b) Without limitation of any other provision of this Agreement,
if, at any time within the calendar year in which the Closing Date occurs, the
Company, any Company Subsidiary or any of the Company Other Entities terminates
the employment of a Company Employee without cause, or such Company Employee
rightfully terminates his or her employment for "good reason" within the meaning
of any agreement between such Company Employee and the Company, any Company
Subsidiary or any of the Company Other Entities, Parent shall pay, or shall
cause to be paid, to such terminated Company Employee, as soon as practicable
after such termination, a pro rata portion of the amount to which the Company
Employee would have been entitled, but for such termination, as an incentive
bonus for such year pursuant to his or her compensation plan for such year. Such
amount shall be prorated based on the number of full weeks of service of such
Company Employee during such year; provided, however, that to the extent the
amount of such incentive bonus is contingent on the attainment of financial
goals of the Company, any Company Subsidiary or any of the Company Other
Entities (and/or any of their respective business units), the amount that shall
be prorated hereunder shall be adjusted so that it bears the same relation to
the total amount of the incentive bonus that the Company Employee was budgeted
to receive for the attainment of such financial goals as the year-to-date
financial results of the Company, such Company Subsidiary or such Company Other
Entity (and/or such business unit, as the case may be) that were actually
attained as of the last day of the month preceding the date of such termination
bear to the year-to-date financial results that were budgeted to be attained as
of the last day of such month.
9.2 INDEMNIFICATION.
(a) From and after the Effective Time, Parent shall cause the
Surviving Corporation to fulfill and honor in all respects the obligations of
the Company pursuant to the indemnification agreements set forth in Section
9.2(a) of the Company Disclosure Schedule in favor of the directors and officers
of the Company (the "Indemnified Parties"). The certificate of incorporation and
bylaws of the Surviving Corporation shall contain provisions with respect to
exculpation and indemnification that are at least as favorable to the
Indemnified Parties as those contained in the certificate of incorporation and
bylaws of the Company as in effect on the date hereof, which provisions shall
not be amended, repealed or otherwise modified for a period of six years from
the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who, immediately prior to the Effective Time, were
directors, officers, employees or agents of the Company, unless such
modification is required by law.
(b) For a period of six years after the Effective Time, Parent
shall cause the Surviving Corporation to use its commercially reasonable efforts
to maintain in effect, if
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available, directors' and officers' liability insurance and employed lawyers
professional liability insurance ("D&O Insurance") covering those persons who
are currently or at the Effective Time covered by the Company's policies for
such insurance on terms comparable to those applicable to the current policies
for such insurance; provided, however, that in no event shall Parent or the
Surviving Corporation be required to expend in excess of 200% of the annual
premium currently paid by the Company for such coverage (or obtain coverage in
excess of the coverage that is available for such 200% of such annual premium).
Promptly after the execution of this Agreement, the Company will consult with
its insurance agents as to the availability and cost of such six year D&O
Insurance extension and the availability and cost of increasing the coverage of
its D&O Insurance for events through the Effective Time to $50 million (or to
incremental amounts between $25 million and $50 million), and the Company will
consult with Parent as to the results of such discussions and obtain binders for
such extended and additional coverage as Parent shall approve, subject to and
effective upon consummation of the Offer.
9.3 TRANSACTION COSTS. Prior to the consummation of the Offer, Parent
shall have caused sufficient funds to be set aside in an escrow account to be
maintained with The Chase Manhattan Bank, N.A. (which is expected to serve as
the depositary for the Offer) under arrangements reasonably acceptable to the
Company to pay all retention bonuses and transaction-based bonuses associated
with the Merger contractually payable by the Company to Company Employees and to
pay the fees and costs of all financial and accounting advisors and legal
counsel retained by the Company in connection with the negotiation and/or
consummation of the Offer and the Merger (with any such funds not required for
such payments to be returned to Parent), a true and complete estimate of which
bonuses, benefits, fees and costs is set forth in Section 9.3 of the Company
Disclosure Schedule.
ARTICLE 10
COVENANTS OF THE COMPANY, PARENT AND MERGER SUB
10.1 PUBLIC DISCLOSURES. Promptly after the execution and delivery of
this Agreement, the Company and Parent will issue a joint press release in a
form that has been mutually approved by the Company and Parent. Parent and the
Company shall not issue any other press release or otherwise make any public
statement with respect to the transactions contemplated by this Agreement prior
to reaching an agreement with respect to the timing and content thereof unless
and only to the extent required to do so by applicable law or regulation or
under the requirements of the Nasdaq National Market system or any other stock
exchange, whether or not such exchange is located within the United States of
America.
10.2 OTHER ACTIONS. None of the Company, Parent and Merger Sub shall,
without the consent of the other party, knowingly or intentionally take any
action, or omit to take any action, if such action or omission would (a) result
in any of its representations and warranties set forth herein being or becoming
untrue in any material respect, or in any of the conditions to the Merger set
forth in this Agreement not being satisfied, (b) (unless such action or omission
is required by applicable law) have a Material Adverse Effect on the ability of
the Company or Parent to obtain any consents or approvals required for the
consummation of the Merger without imposition of a condition or restriction
which would have a Material Adverse Effect on the Surviving Corporation or (c)
otherwise materially impair the ability of the Company or Parent to
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consummate the Merger in accordance with the terms of this Agreement or
materially delay such consummation.
10.3 PROXY STATEMENT; ANTITRUST FILINGS.
(a) As promptly as practicable after consummation of the Offer, if
a special meeting of stockholders is required, the Company will prepare and file
with the SEC a form of proxy statement or other applicable information statement
relating to the Merger (the "Proxy Statement"). The Company will respond to any
comments of the SEC and the Company will cause the Proxy Statement to be mailed
to its stockholders at the earliest practicable time after the SEC has completed
its review of the Proxy Statement. Notwithstanding the foregoing, in the event
that Parent, Merger Sub or any other affiliate of Parent shall acquire at least
90% of the outstanding shares of Company Common Stock pursuant to the Offer, the
parties hereto agree to take all necessary and appropriate action to cause the
Merger to become effective as soon as practicable after the acceptance for
payment of and payment for shares of Company Common Stock by Merger Sub pursuant
to the Offer without a meeting of stockholders of the Company, in accordance
with Section 253 of the DGCL.
(b) As promptly as practicable after the date of this Agreement,
each of the Company and Parent will prepare and file (i) with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice (the "DOJ") Notification and Report Forms relating
to the transactions contemplated herein as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, as agreed to by the
parties (the "Antitrust Filings") and (ii) any other filings required to be
filed by it under the Exchange Act, the Securities Act or any other federal,
state or foreign laws relating to the Merger and the transactions contemplated
by this Agreement (the "Other Filings").
(c) The Company and Parent each shall promptly supply the other
with any information which may be required in order to effectuate any filings
pursuant to this Section 10.3. Each of the Company and Parent will notify the
other promptly upon the receipt of any comments from the SEC, FTC or DOJ or
their respective staffs or any other government officials in connection with any
filing made pursuant hereto and of any request by the SEC, FTC or DOJ or their
respective staffs or any other government officials for amendments or
supplements to the Proxy Statement or any Antitrust Filings or Other Filing or
for additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the FTC, DOJ, SEC, or their respective staffs or any other
governmental officials, on the other hand, with respect to the Registration
Statement, the Prospectus/Proxy Statement, the Merger or any Antitrust Filing or
Other Filing. Each of the Company and Parent will cause all documents that it is
responsible for filing with the SEC, FTC or DOJ or other regulatory authorities
under this Section 10.3 to comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement or any Antitrust Filing or Other Filing, the
Company or Parent, as the case may be, will promptly inform the other of such
occurrence and cooperate in filing with the SEC, FTC or DOJ or their respective
staffs or any other government officials, and/or mailing to stockholders of the
Company and/or Parent, such amendment or supplement.
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(d) If any suit is instituted challenging any of the transactions
contemplated hereby as violative of the HSR Act or any other antitrust or trade
regulatory laws or regulations of any Governmental Entity ("Antitrust Laws"),
Parent and the Company shall each cooperate to contest and resist any such
action or proceeding, and to have vacated, lifted, reversed or overturned any
decree, judgment, injunction or other order (whether temporary, preliminary or
permanent) that is in effect and that restricts, prevents or prohibits
consummation of the transactions contemplated by this Agreement, including,
without limitation, by pursuing all reasonable avenues of administrative and
judicial appeal.
10.4 OTHER FILINGS AND CONSENTS.
(a) Parent shall (i) determine whether any filings other than
those described in Section 10.3 are required to be made or consents required to
be obtained in any jurisdiction prior to the Effective Time in connection with
the consummation of the transactions contemplated hereby and make any such
filings promptly and seek to obtain timely any such consents and (ii) use its
best efforts to cause to be lifted any injunction prohibiting the Merger, or any
part thereof, or the other transactions contemplated hereby.
(b) Subject to the terms and conditions herein provided, and
unless this Agreement shall have been validly terminated as provided herein,
each of Parent and the Company shall use all commercially reasonable efforts (i)
to take, or cause to be taken, all actions necessary to comply promptly with all
legal requirements which may be imposed on such party (or any subsidiaries or
affiliates of such party) with respect to this Agreement and to consummate the
transactions contemplated hereby, subject to the votes of its stockholders
described above, and (ii) to obtain (and to cooperate with the other party to
obtain) any consent, authorization, order or approval of, or any exemption by,
any governmental entity and/or any other public or private third party which is
required to be obtained or made by such party or any of its subsidiaries or
affiliates in connection with this Agreement and the transactions contemplated
hereby. Each of Parent and the Company will promptly cooperate with and furnish
information to the other in connection with any such burden suffered by, or
requirement imposed upon, either of them or any of their subsidiaries or
affiliates in connection with the foregoing.
ARTICLE 11
TERMINATION, AMENDMENT AND WAIVER
11.1 TERMINATION. This Agreement may be terminated at any time prior to
the Effective Time, whether before or after approval of matters presented in
connection with the Merger by the holders of shares of Company Common Stock:
(a) by mutual written consent of Parent and the Company; or
(b) by either Parent or the Company:
(i) if, upon a vote at a duly held meeting of stockholders or
any adjournment thereof, any required approval of the holders of shares of the
Company Common Stock shall not have been obtained;
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(ii) if the Merger shall not have been consummated on or
before the date which is six months after the date of this Agreement, unless the
failure to consummate the Merger is the result of a willful and material breach
of this Agreement by the party seeking to terminate this Agreement;
(iii) if any court of competent jurisdiction or other
governmental entity shall have issued an order, decree or ruling or taken any
other action permanently enjoining, restraining or otherwise prohibiting the
Merger, and such order, decree, ruling or other action shall have become final
and nonappealable;
(iv) in the event of a breach by the other party of any
representation, warranty, covenant or other agreement contained in this
Agreement which (A) would give rise to the failure of a condition set forth in
Article 12 and (B) cannot be or has not been cured within 30 days after the
giving of written notice to the breaching party of such breach (a "Material
Breach"); provided that the terminating party is not then in Material Breach of
any representation, warranty, covenant or other agreement contained in this
Agreement; or
(v) if Merger Sub shall have terminated the Offer in
accordance with its terms and conditions, and otherwise not in violation of this
Agreement, without purchasing any shares of Company Common Stock pursuant
thereto; or
(c) by either Parent or the Company in the event that (i) all of
the conditions to the obligation of such party to effect the Merger set forth in
Section 12.1 shall have been satisfied and (ii) any condition to the obligation
of such party to effect the Merger set forth in Section 12.2 (in the case of
Parent) or Section 12.3 (in the case of the Company) is not capable of being
satisfied prior to the end of the period referred to in Section 11.1(b)(ii); or
(d) by Parent, if in violation of Section 8.5 the Company's Board
of Directors shall have (i) determined to withdraw its recommendation of the
Offer or the Merger to the holders of Company Common Stock or (ii) approved,
recommended or endorsed any Acquisition Transaction (as defined in Section 8.5)
other than this Agreement or (iii) resolved to do any of the foregoing.
11.2 EFFECT OF TERMINATION. In the event of termination of this
Agreement as provided in Section 11.1, this Agreement shall forthwith become
void and have no effect, without any liability or obligation on the part of any
party, other than liabilities and obligations under the provisions of Sections
7.1, 7.2 and 11.2, and except to the extent that such termination results from
the willful and material breach by a party of any of its representations,
warranties, covenants or other agreements set forth in this Agreement.
11.3 AMENDMENT. This Agreement may be amended only by a writing signed
on behalf of each of the parties, at any time before or after approval of this
Agreement and the Merger by the stockholders of the Company and prior to the
Effective Time; provided, however, that following approval by the stockholders
of the Company, there shall be no amendments or change to the provisions hereof
which by law requires further approval by such stockholders, without such
further approval.
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11.4 EXTENSION; WAIVER. At any time prior to the Effective Time of the
Merger, the parties may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement or (c) subject to the proviso in
Section 11.3, waive compliance with any of the agreements or conditions
contained in this Agreement. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of such rights.
11.5 EXPENSES AND FEES. All costs and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expense.
ARTICLE 12
CONDITIONS TO CLOSING
12.1 MUTUAL CONDITION. The respective obligations of each party to
consummate the Merger shall be subject to the satisfaction, at or prior to the
Closing Date, of the following conditions (any of which may be waived in writing
by Parent and the Company):
(a) None of Parent, Merger Sub or the Company, nor any of their
respective subsidiaries, shall be subject to any order, decree or injunction by
a court of competent jurisdiction which (i) prevents or materially delays the
consummation of the Merger or (ii) would impose any material limitation on the
ability of Parent effectively to exercise full rights of ownership of the common
stock of the Surviving Corporation or any material portion of the assets or
business of the Company, the Company Subsidiaries and the Company Other Entities
taken as a whole.
(b) No statute, rule, regulation, executive order, decree,
injunction or other order (whether temporary, preliminary or permanent) shall
have been enacted by the government (or any governmental agency) of the United
States or any other country, or any state, municipality or other political
subdivision thereof, that makes the consummation of the Merger and any other
transaction contemplated hereby illegal. All waiting periods, if any, under the
HSR Act relating to the transactions contemplated hereby shall have expired or
terminated early and all material foreign antitrust approvals required to be
obtained prior to the Merger in connection with the transactions contemplated
hereby shall have been obtained.
(c) The requisite holders of Company Common Stock shall have
approved the adoption of this Agreement and any other matters submitted to them
to the extent required by, and in accordance with the provisions of, Section 8.3
hereof.
12.2 CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB. The
obligations of Parent and Merger Sub to consummate the Merger and the other
transactions contemplated hereby shall be subject to the satisfaction, at or
prior to the Closing Date, of the following conditions (any of which may be
waived by Parent and Merger Sub):
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(a) Each of the agreements of the Company to be performed at or
prior to the Closing Date pursuant to the terms hereof shall have been duly
performed and the Company shall have performed all of the acts required to be
performed by it at or prior to the Closing Date by the terms hereof unless all
such failures together in their entirety, would not, individually or in the
aggregate, have a Material Adverse Effect with respect to the Company or the
consummation of the transactions contemplated by this Agreement.
(b) The representations and warranties of the Company set forth in
Article 4 of this Agreement shall be true and correct as of the date of this
Agreement and as of the Closing except where failure to be so true and correct
would not (in the aggregate for all representations and warranties of the
Company) have a Material Adverse Effect (other than representations and
warranties that are already so qualified, which in each such case shall be true
and correct as written), and except for (i) changes specifically contemplated by
this Agreement and (ii) those representations and warranties that address
matters only as of a particular date (which shall remain true and correct as of
such date); provided, however, that the Company shall not be deemed to be in
breach of any such representations or warranties by taking any action permitted
(or approved by Parent) under Section 8.2. Parent and Merger Sub shall have been
furnished with a certificate, executed by a duly authorized officer of the
Company, dated the Closing Date certifying in such detail as Parent and Merger
Sub may reasonably request as to the fulfillment of the foregoing conditions.
12.3 CONDITIONS TO OBLIGATIONS OF THE COMPANY. The obligations of the
Company to consummate the Merger and the other transactions contemplated hereby
shall be subject to the satisfaction, at or prior to the Closing Date, of the
following conditions (any of which may be waived by the Company):
(a) Each of the agreements of Parent and Merger Sub to be
performed at or prior to the Closing Date pursuant to the terms hereof shall
have been duly performed, in all material respects, and Parent and Merger Sub
shall have performed, in all material respects, all of the acts required to be
performed by them at or prior to the Closing Date by the terms hereof.
(b) The representations and warranties of Merger Sub set forth in
Article 5 and of Parent set forth in Article 6 shall be true and correct, as of
the date of this Agreement and as of the Closing except where failure to be so
true and correct would not (in the aggregate for all representations and
warranties of the Company) have a Material Adverse Effect (other than
representations and warranties that are already so qualified, which in each such
case shall be true and correct as written), and except for (i) changes
specifically contemplated by this Agreement and (ii) those representations and
warranties that address matters only as of a particular date (which shall remain
true and correct as of such date). The Company shall have been furnished with a
certificate, executed by duly authorized officers of Parent and Merger Sub,
dated the Closing Date certifying in such detail as the Company may reasonably
request as to the fulfillment of the foregoing conditions.
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ARTICLE 13
MISCELLANEOUS
13.1 NONSURVIVAL OF REPRESENTATIONS AND WARRANTIES. None of the
representations and warranties in this Agreement or in any instrument delivered
pursuant to this Agreement shall survive the Effective Time.
13.2 SCOPE OF REPRESENTATIONS AND WARRANTIES. The Company shall be not
be deemed to have made to Parent or Merger Sub any representation or warranty
other than as expressly made by the Company in Article 4 hereof. Without
limiting the generality of the foregoing, and notwithstanding any otherwise
express representations and warranties made by the Company in Article 4 hereof,
the Company makes no representation or warranty to Parent or Merger Sub with
respect to (a) any projections, estimates or budgets heretofore delivered or
made available to Parent of future revenues, expenses or expenditures, future
results of operations and other similar projections or estimates or (b) any
other information or documents made available to Parent or its counsel,
accountants or advisors with respect to the Company, the Company Subsidiaries or
the Company Other Entities, except as expressly covered by a representation and
warranty contained in Article 4 hereof.
13.3 NOTICES. All notices, requests, demands or other communications
required by or otherwise given with respect to this Agreement shall be in
writing and shall be deemed to have been duly given to any party when delivered
personally (by courier service or otherwise), or three business days after being
sent by registered or certified mail with postage prepaid, return receipt
requested (provided, however, that in the case of international mailings, such
time period shall instead be the seventh day after deposit by insured delivery
into the national postal system of the county of origin or on the second
business day after delivery to an overnight courier of recognized international
standing), in each case to the applicable addresses set forth below or to such
other address as such party shall have designated by notice so given to each
other party:
If to the Company:
CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Attention: Michael S. Leeds
Facsimile: (516) 562-5718
with a copy to:
CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Attention: Robert D. Marafioti, Esq.
Facsimile: (516) 562-7123
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with a copy to:
Dow, Lohnes & Albertson, PLLC 1200 New Hampshire
Avenue, N.W.
Suite 800
Washington, D.C. 20036
Attention: Richard L. Braunstein, Esq.
Facsimile: (202) 776-2222
If to United, Parent or Merger Sub:
Miller Freeman Worldwide plc
530 Chiswick High Road
London W4 5BG
England
Attention: Ms. Emma Lewis
Facsimile: 011-44-181-987-7756
with a copy to:
United News & Media plc
Ludgate House
245 Blackfriars Road
London SE1 9UY
England
Attention: Ms. Jane Stables
Facsimile: 011-44-171-921-5047
and a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, NY 10005
Attention: James E. Abbott, Esq.
Facsimile: (212) 732-3232
13.4 FURTHER ASSURANCES. Each party hereby agrees to perform any
further acts and to execute and deliver any documents which may be reasonably
necessary to carry out the provisions of this Agreement.
13.5 GOVERNING LAW. This Agreement shall be interpreted, construed and
enforced in accordance with the laws of the State of Delaware, applied without
giving effect to any conflicts-of-law principles.
13.6 "KNOWLEDGE". "To the knowledge," "to the best knowledge" or any
similar phrase shall be deemed to refer to the actual knowledge, after
reasonable investigation, of the Chief Executive Officer and Chief Financial
Officer of a party and also, in the case of the
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Company, the Company's President of Publishing, President of International,
General Counsel, Chief Information Officer, Senior Vice President (Channel
Group), Vice President (OEM Group), Executive Vice President (BTG Group) and
other corporate officers primarily responsible for a business function relevant
to the issue in question.
13.7 "MATERIAL ADVERSE EFFECT". "Material Adverse Effect" means, when
used in connection with the Company or Parent, any change, effect, event or
occurrence that has, or would have, individually or in the aggregate, a material
adverse impact on the business, assets, liabilities, results of operations or
financial condition of such party and its subsidiaries taken as a whole;
provided, however, that "Material Adverse Effect" shall be deemed to exclude (i)
changes in general economic conditions or changes affecting the industries
generally in which such party operates, (ii) changes in trading prices for such
party's capital stock, (iii) stockholder litigation arising from allegations of
a breach of fiduciary duty relating to this Agreement, and (iv) the impact of
changes in GAAP.
13.8 "TAXES". For purposes of this Agreement, the term "Tax" or "Taxes"
shall mean all taxes, charges, fees, levies, penalties or other assessments
imposed by any United States federal, state, local or foreign taxing authority,
including, but not limited to, income, excise, property, sales, transfer,
franchise, payroll, withholding, Social Security or other taxes, including any
interest, penalties or additions attributable thereto. For purposes of this
Agreement, the term "tax return" shall mean any return, report, information
return or other document (including any related or supporting information) with
respect to Taxes.
13.9 CAPTIONS. The captions or headings in this Agreement are made for
convenience and general reference only and shall not be construed to describe,
define or limit the scope or intent of the provisions of this Agreement.
13.10 INTEGRATION OF COMPANY DISCLOSURE SCHEDULE. The Company
Disclosure Schedule attached to this Agreement is an integral part of this
Agreement as if fully set forth herein, and all statements appearing therein
shall be deemed disclosed for all purposes and not only in connection with the
specific representation in which they are explicitly referenced.
13.11 ENTIRE AGREEMENT. This instrument, including the Company
Disclosure Schedule, all Exhibits attached hereto, together with the
Confidentiality Agreement and the Voting Agreement, contains the entire
agreement of the parties and supersedes any and all prior to contemporaneous
agreements between the parties, written or oral, with respect to the
transactions contemplated hereby.
13.12 AMENDMENT. No provision of this Agreement may be waived, changed,
modified, extended, discharged or terminated, except in a writing signed by the
party or parties against whom enforcement of any waiver, change, modification,
extension, discharge or termination is sought.
13.13 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which, when so executed, shall be deemed to be any
original, and such counterparts shall, together, constitute and be one and the
same instrument.
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13.14 BINDING EFFECT; NO THIRD PARTY BENEFICIARIES. This Agreement
shall be binding on, and shall inure to the benefit of, the parties hereto and
their respective successors and assigns. Except for Sections 1A.3, 9.1, 9.2 and
10.3(a), this Agreement is not intended to be for the benefit of and shall not
be enforceable by any person or entity who or which is not a party hereto.
13.15 ASSIGNMENT. No party may assign any right or obligation hereunder
without the prior written consent of the other parties.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement and
Plan of Merger to be executed by their respective duly authorized officers as of
the day and year first above written.
CMP MEDIA INC.
By: /s/ Michael S. Leeds
----------------------
Name: Michael S. Leeds
Title: President and Chief Executive Officer
MFW ACQUISITION CORP.
By: /s/ Donald A. Pazour
----------------------
Name: Donald A. Pazour
Title: Chief Executive Officer
UNITED NEWS & MEDIA PLC
By: /s/ C.R. Stern
----------------
Name: C.R. Stern
Title: Finance Director
MILLER FREEMAN WORLDWIDE PLC
By: /s/ A.M. Tillin
-----------------
Name: A.M. Tillin
Title: Chief Executive Officer
<PAGE>
ANNEX I
Notwithstanding any other provision of this Agreement, Merger Sub shall
not be required to accept for payment or pay for any Company Common Stock
tendered, and may terminate or amend the Offer (subject to the provisions of
this Agreement) and may postpone the acceptance of, and payment for, subject to
Rule 14e-1(c) of the Exchange Act, any Company Common Stock tendered, (A) unless
the following conditions shall have been satisfied: (i) there shall be validly
tendered and not withdrawn prior to the expiration of the Offer a number of
shares of Company Common Stock which represent on a fully diluted basis
(including for purposes of such calculation all Company Common Stock issuable
upon exercise of all vested stock options and warrants and conversion of
convertible securities or other rights to purchase or acquire shares and after
giving effect to the conversion of the Class B Common Stock) at least 51% of the
number and voting power of the shares of Company Common Stock then outstanding
(the " Minimum Condition") and (ii) any applicable waiting period under the HSR
Act shall have expired or been terminated prior to the expiration of the Offer
or (B) if at any time after the date of this Agreement and before the time of
payment for any such Company Common Stock (whether or not any Company Common
Stock has theretofore been accepted for payment or paid for pursuant to the
Offer) any of the following conditions exists:
(a) there shall be in effect an injunction or other order,
decree, judgment or ruling by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission of
competent jurisdiction or a statute, rule, regulation, executive order
or other action or proceeding shall have been promulgated, enacted,
taken, initiated or instituted by a government or a governmental
authority or a governmental, regulatory or administrative agency or
commission of competent jurisdiction which in any such case (i) seeks
to restrain or prohibit the making or consummation of the Offer or the
consummation of the Merger, (ii) seeks to prohibit or restrict in any
material respect the ownership or operation by Merger Sub (or any of
its affiliates or subsidiaries) of any material portion of the
Company's business or assets, or seeks to compel Merger Sub (or any of
its affiliates or subsidiaries) to dispose of or hold separate any
material portion of the Company's business or assets, (iii) seeks to
impose material limitations on the ability of Merger Sub effectively to
acquire or to hold or to exercise full rights of ownership of the
Company Common Stock, including, without limitation, the right to vote
the Company Common Stock purchased by Merger Sub on all matters
properly presented to the stockholders of the Company, or (iv) seeks to
impose any material limitations on the ability of Merger Sub or any of
its affiliates or subsidiaries effectively to control in any material
respect the business and operations of the Company; or
(b) this Agreement shall have been terminated by the Company,
Merger Sub or Parent in accordance with its terms; or
(c) there shall have occurred and be continuing (i) any
general suspension of, or limitation on prices for, trading in
securities on any national securities exchange or the over-the-counter
market, (ii) a declaration of a banking moratorium or any suspension of
payments in respect of banks in the United States, (iii) any limitation
(whether or not mandatory) by any government or Governmental Entity of
the United States on the
<PAGE>
extension of credit by banks or other lending institutions, or (iv) in
the case of any of the foregoing existing at the time of the execution
of this Agreement, a material acceleration or worsening thereof; or
(d) (i) the Board of Directors or any committee thereof shall
have withdrawn, materially modified or changed in a manner adverse to
Parent or Merger Sub the approval or recommendation of the Offer, the
Merger or this Agreement, or approved or recommended any Acquisition
Transaction or any other acquisition of Company Common Stock other than
the Offer or the Merger, or (ii) the Board of Directors or any
committee thereof shall have resolved to do any of the foregoing; or
(e) the representations and warranties of the Company shall
not be true and correct as of the date of this Agreement or as of the
expiration of the Offer except where failure to be so true and correct
would not (in the aggregate for all representations and warranties of
the Company) have a Material Adverse Effect (other than representations
and warranties that are already so qualified, which in each such case
shall be true and correct as written), and except for (i) changes
specifically contemplated by this Agreement and (ii) those
representations and warranties that address matters only as of a
particular date (which shall remain true and correct as of such date);
or
(f) the Company shall have failed to perform any obligation or
to comply with any agreement or covenant of the Company to be performed
or complied with by it under this Agreement unless all such failures
together in their entirety, would not, individually or in the
aggregate, have a Material Adverse Effect; or
(g) the Company shall not have delivered to Parent binding
agreements signed by the holders of Options representing at least 95%
of the Company Common Stock issuable upon exercise of all of the
outstanding Options, agreeing to the cancellation of the Options of
such holders on the terms described in Section 3.1(d) of this
Agreement; or
(h) the Company shall not have delivered to Parent evidence of
binding agreements of the executive officers of the Company to make
payment in full within five business days after the closing of the
Offer (including the delivery of the Cash Price for any shares of
Company Common Stock tendered by such executive officers) of all
amounts of principal and accrued interest, whether or not then due and
owing, under all credit, loan or similar agreements as to which the
Company is a lender to or guarantor of such executive officers; or
(i) there shall since March 31, 1999 have occurred any event
that, individually or when considered together with any other matter,
has had or would have a Material Adverse Effect; or
(j) Merger Sub and the Company shall have agreed that Merger
Sub shall amend the Offer to terminate the Offer or postpone the
payment for Company Common Stock pursuant thereto.
<PAGE>
The foregoing conditions are for the sole benefit of Merger Sub and may
be asserted by Merger Sub regardless of the circumstances giving rise to any
such condition or may be waived by Merger Sub in whole or in part at any time
and from time to time in its sole discretion, subject in each case to the terms
of this Agreement. The failure by Merger Sub at any time to execute any of the
foregoing rights shall not be deemed a waiver of any such right with respect to
particular facts and other circumstances shall not be deemed a waiver with
respect to any other facts and circumstances; and each such right shall be
deemed an ongoing right that may be asserted at any time and from time to time.
<PAGE>
TENDER AND VOTING AGREEMENT
by and among
MFW ACQUISITION CORP.
and
CERTAIN STOCKHOLDERS
OF
CMP MEDIA INC.
Dated as of April 28, 1999
<PAGE>
THIS TENDER AND VOTING AGREEMENT (this "AGREEMENT"), dated as of April
28, 1999, is made and entered into by and among MFW Acquisition Corp., a
Delaware corporation (the "COMPANY"), and the undersigned holders (the
"STOCKHOLDERS") of Class A and Class B Common Stock of CMP Media Inc., a
Delaware corporation ("CMP").
WHEREAS, the Company, Miller Freeman Worldwide plc, an English public
limited company ("Parent"), United News & Media plc, an English public limited
company, and CMP intend to enter into an Agreement and Plan of Merger of even
date herewith (the "MERGER AGREEMENT"), which provides for a tender offer by the
Company for all of the outstanding shares of capital stock of CMP (the "OFFER")
and the merger of the Company with and into CMP and for CMP to become a
wholly-owned affiliate of Parent (the "MERGER");
WHEREAS, at the Effective Time (as defined below) and in accordance
with the terms of the Merger Agreement, each share of Class A Common Stock, par
value $0.01 per share, and each share of Class B Common Stock, par value $0.01
per share, of CMP (the "STOCK") will be converted into the right to receive
$39.00 in cash per share, all as more fully described in the Merger Agreement;
WHEREAS, each Stockholder has the sole right to vote or Dispose of the
number of shares of Stock (collectively, the "SHARES") set forth opposite the
Stockholder's name on SCHEDULE I hereto; and
WHEREAS, as a condition to the Company's willingness to execute and
deliver the Merger Agreement and to consummate the Offer and the Merger and to
the Stockholders' willingness to tender their Shares pursuant to the Offer and
vote their Shares in favor of the Merger, the Stockholders and the Company
desire to establish in this Agreement certain terms and conditions concerning
the Stockholders' Shares with respect to the Offer and the Merger;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.01 DEFINITIONS. (a) Except as otherwise specifically indicated, the
following terms have the following meanings for all purposes of this Agreement:
"BENEFICIALLY OWNS" (or comparable variations thereof) has the meaning
set forth in Rule 13d-3 promulgated under the Exchange Act.
"DEPOSITARY" means Chase Manhattan Bank, N.A.
<PAGE>
"DISPOSE" means assign, sell, pledge, hypothecate or otherwise transfer
or dispose of.
"DISPOSITION" means assignment, sale, pledge, hypothecation or other
transfer or disposition.
"EFFECTIVE TIME" means the time at which the Merger becomes effective
under the General Corporation Law of the State of Delaware.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.
"GOVERNMENTAL OR REGULATORY AUTHORITY" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
"LIEN" means any lien, claim, mortgage, encumbrance, pledge, security
interest, equity or charge of any kind.
"PERSON" means any individual, corporation, partnership, limited
liability company, trust, other entity or group (within the meaning of Section
13(d)(3) of the Exchange Act).
"SUBSIDIARY" means any Person in which Parent or CMP, as the case may
be, directly or indirectly through Subsidiaries or otherwise, beneficially owns
more than fifty percent (50%) of the capital stock or other equity interests in
such Person.
(b) In addition, the following terms are defined in the Sections set
forth below:
<TABLE>
<S> <C> <C>
"Alternative Proposal" -- Section 2.03
"CMP" -- Preamble
"Company" -- Preamble
"Leeds Family Agreement" -- Section 2.01(a)
"Merger" -- Preamble
"Merger Agreement" -- Preamble
"Parent" -- Preamble
"Share Certificates" -- Section 2.04
"Shares" -- Preamble
"Stock" -- Preamble
"Stockholders" -- Preamble
"Stockholders' Meeting" -- Section 2.01(c)
</TABLE>
-2-
<PAGE>
(c) Unless the context of this Agreement otherwise requires, (i) words
of any gender include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; and (iv) the terms "Article" or "Section" refer to the
specified Article or Section of this Agreement. Whenever this Agreement refers
to a number of days, such number shall refer to calendar days unless business
days are specified.
ARTICLE II
COVENANTS OF EACH STOCKHOLDER IN CONNECTION WITH THE OFFER AND THE MERGER
2.01 OWNERSHIP OF SHARES; AGREEMENT TO TENDER; APPROVAL OF MERGER
AGREEMENT.
(a) Until the Effective Time or the earlier termination of this
Agreement in accordance with its terms, each Stockholder agrees (for itself and
not as to any other Stockholder) that he or she will not Dispose of any of the
Shares or any interest therein, deposit any of the Shares into a voting trust or
enter into a voting agreement or arrangement (other than that certain 1997 Leeds
Family Stockholders' Agreement, dated as of June 30, 1997 and as amended (the
"LEEDS FAMILY AGREEMENT ")) or grant any proxy with respect thereto or enter
into any other contract, option or other arrangement or undertaking with respect
to the direct or indirect Disposition of any of the Shares.
(b) Each Stockholder hereby agrees that, if the Company commences the
Offer, such Stockholder will tender, or cause to be tendered, as soon as
practicable (and in any event within ten business days) after the commencement
of the Offer, in accordance with the terms and conditions of the Offer, all
Shares that the Stockholder either owns of record or of which the Stockholder
has the power to control the Disposition as set forth on SCHEDULE I. Each
Stockholder further agrees that he or she will not withdraw such tendered Shares
unless the Offer is terminated by the Company.
(c) Each Stockholder agrees (for itself and not as to any other
Stockholder) that he or she, with respect to those Shares that the Stockholder
either owns of record on the record date for voting at any annual or special
meeting of CMP stockholders to be held for the purpose of voting on the adoption
of the Merger Agreement or for granting any written consent in connection with
the solicitation of written consents in lieu of such a meeting (collectively,
the "STOCKHOLDERS' MEETING") or with respect to which the Stockholder otherwise
controls the vote, will vote or cause to be voted such shares (or execute
written consents with respect to such shares) (i) in favor of the adoption of
the Merger Agreement and the approval of the Merger and the other transactions
contemplated by the Merger Agreement, (ii) against any proposal or offer
(including, without limitation, any proposal or offer to the stockholders of
CMP) with respect to a merger, consolidation or other business combination
including CMP or any of its Subsidiaries or any acquisition or similar
transaction (including, without limitation, a tender or exchange
-3-
<PAGE>
offer) involving the purchase of all or any significant portion of the assets of
CMP and its Subsidiaries taken as a whole or any outstanding shares of the
capital stock of CMP or any Subsidiary of CMP, (iii) against any action which
would result in any of the conditions of the Company's obligation under the
Merger Agreement not being fulfilled and (iv) in favor of any other matter
necessary for the consummation of the transactions contemplated by the Merger
Agreement, including without limitation at the Stockholders' Meeting.
2.02 DIRECTOR ACTIONS. Notwithstanding any other provision of this
Agreement to the contrary, the covenants and agreements set forth herein shall
not prevent each Stockholder from taking any action, subject to the applicable
provisions of the Merger Agreement, while acting in his or her capacity as a
director of CMP in accordance with his or her fiduciary duties.
2.03 NO ALTERNATIVE PROPOSALS. Until the Effective Time or the earlier
termination of this Agreement in accordance with its terms, each Stockholder
agrees (for itself and not as to any other Stockholder) that he or she will not
directly or indirectly through his or her agents and representatives, initiate,
solicit or encourage, any inquiries or the making or implementation of any
alternative proposal (an "ALTERNATIVE PROPOSAL") to acquire the Shares or engage
in any negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any person relating to an Alternative Proposal
or any effort or attempt to make or implement any Alternative Proposal; and such
Stockholder shall (i) immediately cease and cause to be terminated any existing
activities, including discussions or negotiations with any parties, conducted
heretofore with respect to any of the foregoing and will take the necessary
steps to inform his or her agents and representatives of the obligations
undertaken in this Section 2.03, and (ii) notify the Company immediately if any
such inquiries or proposals are received by, any such information is requested
from, or any such negotiations or discussions are sought to be initiated or
continued with, him or her.
2.04 DELIVERY OF CERTIFICATES. Each Stockholder agrees to (i) deliver
one or more certificates evidencing all of such Stockholder's Shares (together
with any replacement certificates or certificates reflecting additional Shares
hereafter acquired by such Stockholder (the "SHARE CERTIFICATES")) to American
Stock Transfer and Trust Company, transfer agent for the Shares, for placement
of an appropriate legend reflecting this Agreement and (ii) keep the Share
Certificates at all times prior to the expiration date of the Offer in the
safekeeping of the Depositary; provided that the Depositary has delivered to
such Stockholder an agreement in form acceptable to such Stockholder and the
Company that the Depositary shall notify such Stockholder and the Company five
business days prior to the date such Share Certificates are to be removed from
the Depositary's safekeeping.
2.05 CONSENTS.
(a) Notwithstanding any pledge agreement or supplement thereto executed
by a Stockholder in favor of Gerard G. Leeds or Liselotte J. Leeds, each of
Gerard G. Leeds and Liselotte J. Leeds hereby consents to the execution,
delivery and performance by any Stockholder of this Agreement and the Merger
Agreement and all transactions contemplated hereby or thereby or necessary in
connection herewith or therewith.
-4-
<PAGE>
(b) Each of Gerard G. Leeds, Liselotte J. Leeds, Michael S. Leeds and
Daniel H. Leeds shall obtain, no later than the date that is twenty business
days after the date hereof, all requisite consents to the execution, delivery or
performance by any Stockholder of this Agreement from Fleet National Bank in
connection with that certain Amended and Restated Negative Pledge Agreement (the
"FLEET AGREEMENT").
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF EACH STOCKHOLDER
Each Stockholder, as to such Stockholder only, hereby represents and
warrants to the Company as follows:
3.01 OWNERSHIP OF SHARES. The Stockholder is the sole beneficial and
record holder of, and has the sole right to vote with respect to, as of the date
hereof, the number of Shares set forth opposite such Stockholder's name on
SCHEDULE I hereto (collectively, the "SHARES"), subject to no rights of others
and free and clear of any Lien (except pursuant to the Fleet Agreement). The
Stockholder's right to vote or Dispose of the Shares is not subject to any
voting trust, voting agreement, voting arrangement or proxy (other than the
Leeds Family Agreement), and such Stockholder has not entered into any other
contract, option or other arrangement or undertaking with respect thereto.
Except for the Shares listed on SCHEDULE I hereto, such Stockholder does not
have any right to acquire, nor does he or she beneficially own any other shares
of any class of capital stock of CMP or any securities convertible into or
exchangeable or exercisable for any shares of any class of capital stock of CMP
(other than shares subject to options or other rights granted by CMP, which
options shall be canceled as contemplated under Section 3.1(d) of the Merger
Agreement).
3.02 AUTHORITY. This Agreement has been duly and validly executed and
delivered by the Stockholder and constitutes a legal, valid and binding
obligation of the Stockholder enforceable against the Stockholder in accordance
with its terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.03 NO CONFLICTS. The execution and delivery by the Stockholder of
this Agreement do not, and the performance by the Stockholder of his or her
obligations under this Agreement and (other than referred to in Section 2.05
hereof) the consummation of the transactions contemplated hereby will not:
(a) conflict with or result in a violation or breach of any term or
provision of any law, statute, rule or regulation or any order, judgment or
decree of any Governmental or Regulatory Authority applicable to the Stockholder
or any of his or her properties or assets; or
-5-
<PAGE>
(b) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require the Stockholder to obtain any consent, approval or action of, make
any filing with or give any notice to any Person as a result or under the terms
of, or (iv) result in the creation or imposition of any Lien upon any of the
Stockholder's properties or assets under, any contract, agreement, plan, permit
or license to which the Stockholder is a party, including, but not limited to,
the Leeds Family Agreement.
3.04 OPTIONS AND WARRANTS. Each of Michael S. Leeds and Daniel H. Leeds
hereby represents and warrants as to himself only that he has consented to the
cancellation, prior to the expiration date of the Offer and without payment
therefor (except for any payments to be made pursuant to their respective
employment agreements), of all vested and unvested options and warrants held by
him to purchase Shares.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Stockholders as
follows:
4.01 INCORPORATION. The Company is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware.
The Company has the requisite corporate power and authority to execute and
deliver this Agreement, to perform its obligations hereunder and to consummate
the transactions contemplated hereby.
4.02 AUTHORITY. The execution and delivery by the Company of this
Agreement, and the performance by the Company of its obligations hereunder, have
been duly and validly authorized by the Board of Directors of the Company, no
other corporate action on the part of the Company or its stockholders being
necessary. This Agreement has been duly and validly executed and delivered by
the Company and constitutes a legal, valid and binding obligation of the Company
in accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium or
other similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
4.03 NO CONFLICTS. The execution and delivery by the Company of this
Agreement do not, and the performance by the Company of its obligations under
this Agreement and the consummation of the transactions contemplated hereby will
not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provisions of the certificate of incorporation or bylaws of
the Company;
(b) conflict with or result in a violation or breach of any term or
provision of any law, statute, rule or regulation or any order, judgment or
decree of any Governmental or Regulatory Authority applicable to the Company or
any of its properties or assets; or
-6-
<PAGE>
(c) (i) conflict with or result in a violation or breach of, (ii)
constitute (with or without notice or lapse of time or both) a default under,
(iii) require the Company to obtain any consent, approval or action of, make any
filing with or give any notice to any Person as a result or under the terms of,
or (iv) result in the creation or imposition of any Lien upon the Company or any
of its properties or assets under, any contract, agreement, plan, permit or
license to which the Company is a party.
ARTICLE V
GENERAL PROVISIONS
5.01 SURVIVAL OF REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS.
Notwithstanding any right of any party (whether or not exercised) to investigate
the accuracy of the representations and warranties of the other party contained
in this Agreement, each party hereto has the right to rely fully upon the
representations and warranties of the other contained in this Agreement. The
representations and warranties contained herein shall be made as of the date
hereof and as of the consummation of the Offer. Except as provided in SECTION
5.02, the representations, warranties, covenants and agreements of each party
hereto contained in this Agreement will survive until the termination of this
Agreement.
5.02 TERMINATION. This Agreement and all rights and obligations of the
parties hereunder, including, without limitation, the provisions of SECTION
2.01, shall automatically terminate, and shall cease to be of any further force
and effect, upon the earlier to occur of (i) the termination of (a) the Offer in
accordance with its terms and conditions without the Company having purchased
any shares of Stock or (b) the Merger Agreement in accordance with its terms,
and (ii) the mutual written agreement of the Stockholders and the Company.
Notwithstanding the termination of this Agreement, nothing contained herein
shall relieve any party hereto from liability for breach of any of his, her or
its representations, warranties, covenants or agreements contained in this
Agreement.
5.03 AMENDMENT AND WAIVER. (a) This Agreement may be amended,
supplemented or modified only by a written instrument duly executed by or on
behalf of each party hereto.
(b) Any term or condition of this Agreement may be waived at any time
by the party that is entitled to the benefit thereof, but no such waiver shall
be effective unless set forth in a written instrument duly executed by or on
behalf of the party waiving such term or condition. No waiver by any party of
any term or condition of this Agreement, in any one or more instances, shall be
deemed to be or construed as a waiver of the same or any other term or condition
of this Agreement on any future occasion. All remedies, either under this
Agreement or by law or otherwise afforded, will be cumulative and not
alternative.
-7-
<PAGE>
5.04 NOTICES. All notices, requests, demands or other communications
required by or otherwise given with respect to this Agreement shall be in
writing and shall be deemed to have been duly given to any party when delivered
personally (by courier service or otherwise), or three business days after being
sent by registered or certified mail with postage prepaid, return receipt
requested (provided, however, that in the case of international mailings, such
time period shall instead be the seventh day after deposit by insured delivery
into the national postal system of the country of origin or on the second
business day after delivery to an overnight courier of recognized international
standing), in each case to the applicable addresses set forth below or to such
other address as such party shall have designated by notice so given to each
other party:
If to the Stockholders, to:
the addresses set forth on SCHEDULE I hereto
with a copy to:
Dow, Lohnes & Albertson, PLLC
1200 New Hampshire Avenue, N.W.
Suite 800
Washington, D.C. 20036-6802
Facsimile No.: (202) 776-2222
Attn: Edward J. O'Connell, Esq.
If to the Company, to:
Miller Freeman Worldwide, plc
530 Chiswick High Road
London W4 5BG
England
Facsimile No.: 011 44 181 987 7756
Attention: Ms. Emma Lewis
with a copy to:
Carter, Ledyard & Milburn
2 Wall Street
New York, NY 10005
Facsimile No.: (212) 732-3232
Attention: James Abbott, Esq.
-8-
<PAGE>
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section 5.04, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section 5.04, be deemed given upon receipt, and (iii) if
delivered by mail in the manner described above to the address as provided in
this Section 5.04, be deemed given upon receipt (in each case regardless of
whether such notice, request or other communication is received by any other
person to whom a copy of such notice, request or other communication is to be
delivered pursuant to this Section 5.04). Any party from time to time may change
its address, facsimile number or other information for the purpose of notices to
that party by giving notice specifying such change to the other parties hereto.
5.05 ENTIRE AGREEMENT. This Agreement supersedes all prior discussions
and agreements among the parties hereto with respect to the subject matter
hereof and contains the sole and entire agreement among the parties hereto with
respect to the subject matter hereof.
5.06 NO THIRD PARTY BENEFICIARY. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto, and it is
not the intention of the parties to confer third-party beneficiary rights upon
any other Person.
5.07 NO ASSIGNMENT; BINDING EFFECT. Neither this Agreement nor any
right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void. Subject to the preceding sentence, this Agreement is binding
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns and legal representatives.
5.08 SPECIFIC PERFORMANCE; LEGAL FEES. The parties acknowledge that
money damages are not an adequate remedy for violations of any provision of this
Agreement and that any party may, in his, her or its sole discretion, apply to a
court of competent jurisdiction for specific performance for injunctive or such
other relief as such court may deem just and proper in order to enforce any such
provision or prevent any violation hereof and, to the extent permitted by
applicable law, each party waives any objection to the imposition of such
relief.
5.09 HEADINGS. The headings used in this Agreement have been inserted
for convenience of reference only and do not define or limit the provisions
hereof.
5.10 INVALID PROVISIONS. If any provision of this Agreement is held to
be illegal, invalid or unenforceable under any present or future law, and if the
rights or obligations of any party hereto under this Agreement will not be
materially and adversely affected thereby, (i) such provision will be fully
severable, (ii) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof
and (iii) the remaining provisions of this Agreement will remain in full force
and effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance herefrom.
-9-
<PAGE>
5.11 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to a contract
executed and performed in such State, without giving effect to the conflicts of
laws principles thereof.
5.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument.
-10-
<PAGE>
IN WITNESS WHEREOF, each party hereto has signed this Agreement, or
caused this Agreement to be signed by its officer thereunto duly authorized, as
of the date first above written.
MFW ACQUISITION CORP.
By: /s/ Donald A. Pazour
---------------------------------------
Name: Donald A. Pazour
Title: Chief Executive Officer
GERARD G. LEEDS LIFETIME TRUST
By: /s/ Gerard G. Leeds
---------------------------------------
Gerard G. Leeds, as Trustee
LISELOTTE J. LEEDS LIFETIME TRUST
By: /s/ Liselotte J. Leeds
---------------------------------------
Liselotte J. Leeds, as Trustee
/s/ Michael S. Leeds
------------------------------------------
MICHAEL S. LEEDS
/s/ Richard A. Leeds
------------------------------------------
RICHARD A. LEEDS
/s/ Daniel H. Leeds
------------------------------------------
DANIEL H. LEEDS
/s/ Greg Jobin-Leeds
------------------------------------------
GREG JOBIN-LEEDS
/s/ Jennifer Leeds
------------------------------------------
JENNIFER LEEDS
<PAGE>
THE MICHAEL S. LEEDS 1997 GRAT
By: /s/ Michael S. Leeds
----------------------------------------
Michael S. Leeds, as Trustee
THE MICHAEL S. LEEDS 1999 GRAT
By: /s/ Michael S. Leeds
----------------------------------------
Michael S. Leeds, as Trustee
THE RICHARD A. LEEDS 1997 GRAT
By: /s/ Richard A. Leeds
----------------------------------------
Richard A. Leeds, as Trustee
THE DANIEL H. LEEDS 1997 GRAT
By: /s/ Daniel H. Leeds
----------------------------------------
Daniel H. Leeds, as Trustee
THE GREG JOBIN-LEEDS 1997 GRAT
By: /s/ Greg Jobin-Leeds
----------------------------------------
Greg Jobin-Leeds, as Trustee
KALEIDOSCOPE FOUNDATION
By: /s/ Richard A. Leeds
----------------------------------------
Name: Richard A. Leeds
Title: Co-President
<PAGE>
THE GIANT STEPS FOUNDATION
By: /s/ Jennifer Leeds
----------------------------------------
Name: Jennifer Leeds
Title: President
ACCESS FUND, INC.
By: /s/ Greg Jobin-Leeds
----------------------------------------
Name: Greg Jobin-Leeds
Title: Secretary
THE ANDREA AND MICHAEL LEEDS FAMILY
FOUNDATION
By: /s/ Michael S. Leeds
----------------------------------------
Name: Michael S. Leeds
Title: Trustee
THE SUNITA AND DANIEL LEEDS FAMILY
FOUNDATION
By: /s/ Daniel H. Leeds
----------------------------------------
Name: Daniel H. Leeds
Title: Trustee
<PAGE>
SCHEDULE I
SHARES OF COMMON STOCK OWNED BY EACH STOCKHOLDER
4/28/99
<TABLE>
<CAPTION>
STOCKHOLDER NUMBER OF SHARES
CLASS A CLASS B
<S> <C> <C>
Gerard G. Leeds Lifetime Trust -- 1,111,342
c/o CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Facsimile: (516) 562-7123
Liselotte J. Leeds Lifetime Trust -- 1,106,342
c/o CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Facsimile: (516) 562-7123
Michael S. Leeds 370,638 1,987,640(1)
c/o CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Facsimile: (516) 562-7123
Richard A. Leeds 9,300 1,412,737(2)
c/o CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Facsimile: (516) 562-7123
</TABLE>
- --------
1 Includes 207,504 shares owned by the Michael S. Leeds 1997 GRAT, 750,000
shares owned by the Michael S. Leeds 1999 GRAT and 1,030,136 shares owned by
Michael S. Leeds directly.
2 Includes 975,760 shares owned by the Richard A. Leeds 1997 GRAT and 436,977
shares owned by Richard A. Leeds directly.
<PAGE>
<TABLE>
<S> <C> <C>
Daniel H. Leeds 392,620 1,705,999(3)
c/o CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Facsimile: (516) 562-7123
Greg Jobin-Leeds -- 1,392,567(4)
c/o CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Facsimile: (516) 562-7123
Jennifer Leeds -- 1,378,597
c/o CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Facsimile: (516) 562-7123
Kaleidoscope Foundation 530,820 30,000
c/o CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Facsimile: (516) 562-7123
The Giant Steps Foundation 303,330 27,586
405 El Camino Real #514
Menlo Park, CA 94025
(650) 332-3112
(no fax)
The Andrea and Michael Leeds 130,000 --
Family Foundation
c/o CMP Media Inc.
Manhasset, NY 11030
Facsimile: (516) 562-7123
</TABLE>
- --------
3 Includes 195,171 shares owned by the Daniel H. Leeds 1997 GRAT and 1,510,828
shares owned by Daniel H. Leeds directly.
4 Includes 330,740 shares owned by the Greg Jobin-Leeds 1997 GRAT and 1,061,827
shares owned by Greg Jobin-Leeds directly.
<PAGE>
<TABLE>
<S> <C> <C>
The Sunita and Daniel Leeds 256,000 --
Family Foundation
c/o Miller Ellin & Co.
750 Lexington Ave
New York, NY 10022
Facsimile: (212) 750-2727
Access Fund, Inc. 256,000 --
c/o Schott Foundation
678 Massachusetts Avenue
Cambridge, MA 02139
Facsimile: (617) 876-7702
</TABLE>
<PAGE>
Exhibit 3
AGREEMENT TO TERMINATE OPTION AGREEMENT
AND STOCKHOLDERS' AGREEMENT
AND TO AMEND EMPLOYMENT AGREEMENT
This Agreement to Terminate Option Agreement and Stockholders'
Agreement and to Amend Employment Agreement is made and entered into as of the
23rd day of April, 1999, by and between CMP MEDIA INC., a Delaware corporation
(the "Company"), and MICHAEL S. LEEDS ("Michael").
WHEREAS, the Company and Michael are parties to an Option Agreement
dated as of November 27, 1996 (the "Option Agreement") under which Michael holds
an option to purchase a total of 755,040 shares of Class A Common Stock of the
Company; and
WHEREAS, the Company and Michael are parties to an Employment Agreement
dated as of November 27, 1996 (the "Employment Agreement") under which Michael
is entitled to be paid severance by the Company in the event his employment with
the Company is terminated by reason of his Dismissal Without Cause or his
Resignation for Good Reason (as defined therein), provided that he complies with
certain restrictive covenants concerning the Company as set forth in the
Employment Agreement; and
WHEREAS, the Company, Michael, Gerard G. Leeds and Liselotte J. Leeds
are parties to a Stockholders' Agreement dated as of November 27, 1996
<PAGE>
(the "Stockholders' Agreement") under which Michael holds 566,280 restricted
shares of Class A Common Stock of the Company; and
WHEREAS, the Company is presently exploring strategic alternatives
which may include a merger or sale of the Company resulting in a Change in
Control (as defined in the Option Agreement and the Employment Agreement) (such
merger or sale hereinafter referred to as a "Transaction"); and
WHEREAS, potential parties to a Transaction have indicated that
uncertainty regarding Michael's rights under the Option Agreement following
consummation of a Transaction may present impediments to a proper valuation of
the Company and to a successful consummation of a Transaction; and
WHEREAS, to facilitate the Company's consummation of a Transaction,
Michael is willing to waive all his rights under the Option Agreement (including
his right to exercise any options thereunder) and to terminate the Option
Agreement, in exchange for which the Company is willing to modify certain
provisions of the Employment Agreement and terminate the Stockholders'
Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties, the parties
hereto, intending to be legally bound, hereby covenant and agree as follows:
<PAGE>
Section 1. TERMINATION OF OPTION AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, the Option Agreement shall terminate in its entirety immediately
preceding the consummation of such Transaction, and neither Michael nor the
Company shall have any further rights or obligations thereunder. In furtherance
but not in limitation of the foregoing, upon the consummation of a Transaction
(a) every option to purchase shares of Class A Common Stock of the Company under
the Option Agreement shall expire and all rights thereunder shall be
extinguished, and (b) Michael shall not be subject to any pre- or
post-employment covenants under the terms of the Option Agreement.
Section 2. AMENDMENT OF EMPLOYMENT AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, the Employment Agreement shall be automatically and without
further action of the parties amended as of the business day immediately
preceding the consummation of such Transaction as follows:
(a) Section 3.3(a)(A) shall be amended to read in its entirety as follows:
"(A) On his own behalf or on behalf of any other person or entity,
(1) participates or is involved in or has direct responsibility for the
day-to-day management or operation of a Competitive Business; (2) owns,
in whole or in part, beneficially or of record, directly or indirectly,
an equity interest (or an interest convertible into equity) in a
Competitive Business; or (3) renders services to a Competitive Business
as a director, officer, employee or independent sales representative or,
to the extent such services relate directly to the activities of such
Competitive Business that compete with a CMP Business, as a consultant,
advisor or agent. (By way of illustration, services rendered to a
Competitive Business as an investment banker would not in themselves be
deemed to relate directly to such activities of such Competitive Business.)"
<PAGE>
(b) Section 3.3(a)(D) shall be amended to read in its entirety as follows:
"(D) Employs or causes any person or entity other than the CMP Group to
employ any former employee of the CMP Group within six (6) months after
the voluntary resignation of such former employee from the CMP Group."
(c) Section 3.3(a)(F) shall be amended to read in its entirety as follows:
(F) Communicates publicly (other than pursuant to subpoena in a legal
proceeding) or to the press, or writes or produces for publication in any
medium, on the subject of, or with express or implied reference to, the
CMP Group in a manner intended to disparage the CMP Group or any of their
former or current stockholders, directors, officers or employees in their
capacities as such. For the purpose hereof, "implied reference" shall
mean a reference that does not expressly name the CMP Group or any of
their former, current or future stockholders, directors, officers or
employees but that nevertheless would be understood by the average reader
or audience-member to refer thereto. Notwithstanding the foregoing, if
the CMP Group or any of their former or current stockholders, directors,
officers or employees publicly disparage Michael, it shall not be deemed
a violation of this clause (F) for Michael to communicate publicly in
reasonable response to such disparagement.
(d) Section 3.3(b) shall be amended to read in its entirety as follows:
"(b) Notwithstanding the provisions of paragraph (a) of this Section 3.3,
Michael shall not be deemed to be engaged in competition with the CMP
Group solely by reason of Michael's ownership of (i) a direct or indirect
equity interest of five percent (5%) or less in the securities of a
Competitive Business or (ii) an interest in a mutual fund which owns an
interest in a Competitive Business, provided that Michael has no
influence or control over the selection of such mutual fund's investment
decisions."
(e) Section 3.5(c) shall be amended to read in its entirety as follows:
"(c) During the period in which the Company is making payments to Michael
pursuant to Article IV, Michael shall, at such times as the Company may
reasonably request and as do not unreasonably interfere with Michael's
other permitted business activities or commitments, provide information,
testimony and assistance in connection with the prosecution or defense of
any claims by or against the Company (other than any claims with respect
to which Michael is an adverse party) arising out of matters of
<PAGE>
which he acquired knowledge while an employee of the Company. The Company
shall reimburse Michael for all reasonable out-of-pocket expenses he
incurs in rendering such assistance."
<PAGE>
(f) Section 3.5(d) shall be amended to read in its entirety as follows:
"(d) During the period in which the Company is making payments to Michael
pursuant to Article IV, Michael shall not willfully make any oral or
written statement which reflects adversely upon the character, honesty,
credit, efficiency or business practices of the CMP Group or its former
or current stockholders, directors, officers or employees in their
capacities as such. Notwithstanding the foregoing, if the CMP Group makes
any oral or written statement which reflects adversely upon the
character, honesty, credit, efficiency or business practices of Michael,
it shall not be deemed a violation of this paragraph (d) for Michael to
communicate publicly in reasonable response thereto."
(g) Section 4.1 shall be amended in its entirety as follows:
"(a) In the event that Michael's employment with the Company terminates
by reason of his Dismissal Without Cause or his Resignation For Good
Reason, the Company shall, in consideration of Michael's compliance with
the restrictive covenants set forth in Article III and in lieu of any
other severance obligations to Michael, provide the following:
(i) The Company shall pay Michael through the period ending
on the earlier of (A) the third anniversary of the date of his
termination of employment or (B) the date Michael attains the age of
sixty-five (65) (the "Severance Period"), an annual amount of
$1,849,840. Payments shall be made in bi-weekly installments or on
such other periodic basis as the Company then makes salary payments
to its employees generally.
(ii) If Michael elects to receive continued healthcare
coverage from the Company pursuant to the provisions of Section 601
et seq. of ERISA ("COBRA"), the Company shall continue to pay a share
of the applicable premiums for such COBRA coverage so that the cost to
Michael (excluding any tax benefits provided by the Company Code
Section 125 premium conversion plan) shall be no greater than the cost
to Michael for healthcare coverage while he was actively employed
immediately prior to his termination of employment. To the extent that
the Severance Period extends beyond the COBRA period and Michael elects
to convert to an individual insurance policy at the end of the COBRA
period, the Company shall pay a portion of the conversion premium
through the balance of the Severance Period so that the net cost to
Michael (excluding any tax benefits provided by the Company Code
Section 125 premium conversion plan)
<PAGE>
shall be no greater than the cost to Michael for healthcare coverage
while he was actively employed immediately prior to his termination of
employment. The obligation of the Company with respect to healthcare
coverage hereunder shall terminate in the event that Michael becomes
covered under the group healthcare plan of another person or entity
providing comparable benefits.
(iii) For a period of six (6) months from the date of
Michael's termination of employment (or from such later date as, at the
Company's request, he continues to have use of the Company's voice-mail
and e-mail systems), (A) Michael may continue to use the mailboxes in
the Company's voice-mail system which were assigned to him during his
employment, and (B) the Company shall cause all e-mails which are sent
to the mailboxes in the Company's e-mail system which were assigned to
him during his employment to be forwarded to such e-mail mailboxes
outside the Company's email systems as he may designate, provided that
he shall promptly forward to such person as the Company may designate
any e-mail communications he receives which relate to the business of
the Company. Michael shall be entitled to retain the Company laptop
computer (including software other than network access software), Palm
Pilot, home fax machine and home printer which he is using as of the
date of his termination of employment, provided that he first gives the
Company access to the laptop computer so that the Company may remove
any Company confidential information resident thereon.
"(b) In addition, the Company shall have the right, but not the
obligation, to require Michael's continued compliance with the
restrictive covenants set forth in Article III for up to two (2) years
after the expiration of the period for which the Company is obligated
to pay Michael under paragraph (a) of this Section 4.1, in
consideration of which the Company shall continue to pay Michael,
during the period of time elected by the Company, on the same basis and
in the same manner as set forth in paragraph (a) of this Section 4.1.
Such right shall be exercisable by the Company by giving Michael
written notice of exercise no later than six (6) months after
termination of his employment with the Company."
(h) The definition of "CMP Business" in Article VII shall be amended to read in
its entirety as follows:
"`CMP BUSINESS' shall mean any publication, product or service that, on
the
<PAGE>
date of the Transaction, (a) the CMP Group publishes, produces or
provides or (b) the CMP Group has a bona fide plan or intention to
publish, produce or provide within the succeeding 12-month period, the
research and development of which the CMP Group has devoted substantive
time and attention to, and which plan or intention Michael has actual
knowledge of before he engages in any activity competitive with such
CMP Business as contemplated by clause (A) of Section 3.3(a)."
(i) The definition of "CMP Group" in Article VII shall be amended to read in its
entirety as follows:
"`CMP GROUP' shall mean the Company or any subsidiary in which it holds
a majority interest."
<PAGE>
(j) A definition of "Competitive Business" shall be inserted in Article VII to
read in its entirety as follows:
"`COMPETITIVE BUSINESS' shall mean (a) any publication, product or
service that competes directly with a CMP Business or (b) any business
more than 15% of the gross revenue of which is earned from one or more
publications, products or services that compete directly with one or more
CMP Businesses."
(k) The definitions of "Direct Competitor", "Directly Competitive Company",
"Indirect Competitor" and "Indirectly Competitive Company" shall be deleted from
Article VII in their entirety.
Section 3. TERMINATION OF STOCKHOLDERS' AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, and, in connection therewith, Michael sells the restricted shares
of Class A Common Stock which he holds under the Stockholder' Agreement, the
Stockholders' Agreement shall terminate in its entirety immediately upon his
sale of such shares, and no party thereto shall have any further rights or
obligations thereunder. In furtherance but not in limitation of the foregoing,
following his sale of such shares Michael shall not be subject to any pre- or
post-employment covenants under the terms of the Stockholders' Agreement.
Section 4. EFFECTIVENESS OF AGREEMENT.
This Agreement shall remain in full force and effect until the earlier
of the date on which a Transaction is consummated or the close of business on
March 1, 2000. If a Transaction has not been consummated on or before March 1,
2000, then this Agreement shall be null and void as of its inception, and
Michael and the Company shall have all of their respective rights and
obligations under the Option
<PAGE>
Agreement and the Employment Agreement as if this Agreement had never existed.
Section 5. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, representatives, successors and permitted
assigns. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without reference to its
principles regarding choice or conflicts of law. This Agreement shall survive
any merger, sale or other disposition of the Company and shall survive the
termination of Michael's employment with the Company.
<PAGE>
IN WITNESS WHEREOF, Michael has executed this Agreement and the Company
has caused this Agreement to be executed by an officer thereunto duly authorized
on the day and year first above written.
CMP MEDIA INC.
By /s/ Daniel H. Leeds /s/ Michael S. Leeds
------------------------ --------------------------
Name: Daniel H. Leeds MICHAEL S. LEEDS
Title: Executive Vice President
President of International
Attest:
[CORPORATE SEAL]
/s/ Robert D. Marafioti
- -------------------------
<PAGE>
Exhibit 4
AGREEMENT TO TERMINATE OPTION AGREEMENT
AND STOCKHOLDERS' AGREEMENT
AND TO AMEND EMPLOYMENT AGREEMENT
This Agreement to Terminate Option Agreement and Stockholders'
Agreement and to Amend Employment Agreement is made and entered into as of the
23rd day of April, 1999, by and between CMP MEDIA INC., a Delaware corporation
(the "Company"), and DANIEL H. LEEDS ("Dan").
WHEREAS, the Company and Dan are parties to an Option Agreement dated
as of November 27, 1996 (the "Option Agreement") under which Dan holds an option
to purchase a total of 943,800 shares of Class A Common Stock of the Company;
and
WHEREAS, the Company and Dan are parties to an Employment Agreement
dated as of November 27, 1996 (the "Employment Agreement") under which Dan is
entitled to be paid severance by the Company in the event his employment with
the Company is terminated by reason of his Dismissal Without Cause or his
Resignation for Good Reason (as defined therein), provided that he complies with
certain restrictive covenants concerning the Company as set forth in the
Employment Agreement; and
WHEREAS, the Company, Dan, Gerard G. Leeds and Liselotte J. Leeds are
parties to a Stockholders' Agreement dated as of November 27, 1996 (the
"Stockholders' Agreement") under which Dan holds 377,520 restricted shares of
Class A Common Stock of the Company; and
<PAGE>
WHEREAS, the Company is presently exploring strategic alternatives
which may include a merger or sale of the Company resulting in a Change in
Control (as defined in the Option Agreement and the Employment Agreement) (such
merger or sale hereinafter referred to as a "Transaction"); and
WHEREAS, potential parties to a Transaction have indicated that
uncertainty regarding Dan's rights under the Option Agreement following
consummation of a Transaction may present impediments to a proper valuation of
the Company and to a successful consummation of a Transaction; and
WHEREAS, to facilitate the Company's consummation of a Transaction, Dan
is willing to waive all his rights under the Option Agreement (including his
right to exercise any options thereunder) and to terminate the Option Agreement,
in exchange for which the Company is willing to modify certain provisions of the
Employment Agreement and terminate the Stockholders' Agreement; and
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by each of the parties, the parties
hereto, intending to be legally bound, hereby covenant and agree as follows:
Section 1. TERMINATION OF OPTION AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, the Option Agreement shall terminate in its entirety immediately
preceding the consummation of such Transaction, and neither
<PAGE>
Dan nor the Company shall have any further rights or obligations thereunder. In
furtherance but not in limitation of the foregoing, upon the consummation of a
Transaction (a) every option to purchase shares of Class A Common Stock of the
Company under the Option Agreement shall expire and all rights thereunder shall
be extinguished, and (b) Dan shall not be subject to any pre- or post-employment
covenants under the terms of the Option Agreement.
Section 2. AMENDMENT OF EMPLOYMENT AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, the Employment Agreement shall be automatically and without
further action of the parties amended as of the business day immediately
preceding the consummation of such Transaction as follows:
(a) Section 3.3(a)(A) shall be amended to read in its entirety as follows:
"(A) On his own behalf or on behalf of any other person or entity, (1)
participates or is involved in or has direct responsibility for the
day-to-day management or operation of a Competitive Business; (2) owns,
in whole or in part, beneficially or of record, directly or indirectly,
an equity interest (or an interest convertible into equity) in a
Competitive Business; or (3) renders services to a Competitive Business
as a director, officer, employee or independent sales representative or,
to the extent such services relate directly to the activities of such
Competitive Business that compete with a CMP Business, as a consultant,
advisor or agent. (By way of illustration, services rendered to a
Competitive Business as an investment banker would not in themselves be
deemed to relate directly to such activities of such Competitive
Business.)"
(b) Section 3.3(a)(D) shall be amended to read in its entirety as follows:
"(D) Employs or causes any person or entity other than the CMP Group to
employ any former employee of the CMP Group within six (6) months after
the voluntary resignation of such former employee from the CMP Group."
<PAGE>
(c) Section 3.3(a)(F) shall be amended to read in its entirety as follows:
(F) Communicates publicly (other than pursuant to subpoena in a legal
proceeding) or to the press, or writes or produces for publication in any
medium, on the subject of, or with express or implied reference to, the
CMP Group in a manner intended to disparage the CMP Group or any of their
former or current stockholders, directors, officers or employees in their
capacities as such. For the purpose hereof, "implied reference" shall
mean a reference that does not expressly name the CMP Group or any of
their former, current or future stockholders, directors, officers or
employees but that nevertheless would be understood by the average reader
or audience-member to refer thereto. Notwithstanding the foregoing, if
the CMP Group or any of their former or current stockholders, directors,
officers or employees publicly disparage Dan, it shall not be deemed a
violation of this clause (F) for Dan to communicate publicly in
reasonable response to such disparagement.
(d) Section 3.3(b) shall be amended to read in its entirety as follows:
"(b) Notwithstanding the provisions of paragraph (a) of this Section 3.3,
Dan shall not be deemed to be engaged in competition with the CMP Group
solely by reason of Dan's ownership of (i) a direct or indirect equity
interest of five percent (5%) or less in the securities of a Competitive
Business or (ii) an interest in a mutual fund which owns an interest in a
Competitive Business, provided that Dan has no influence or control over
the selection of such mutual fund's investment decisions."
(e) Section 3.5(c) shall be amended to read in its entirety as follows:
"(c) During the period in which the Company is making payments to Dan
pursuant to Article IV, Dan shall, at such times as the Company may
reasonably request and as do not unreasonably interfere with Dan's other
permitted business activities or commitments, provide information,
testimony and assistance in connection with the prosecution or defense of
any claims by or against the Company (other than any claims with respect
to which Dan is an adverse party) arising out of matters of which he
acquired knowledge while an employee of the Company. The Company shall
reimburse Dan for all reasonable out-of-pocket expenses he incurs in
rendering such assistance."
<PAGE>
(f) Section 3.5(d) shall be amended to read in its entirety as follows:
"(d) During the period in which the Company is making payments to Dan
pursuant to Article IV, Dan shall not willfully make any oral or written
statement which reflects adversely upon the character, honesty, credit,
efficiency or business practices of the CMP Group or its former or
current stockholders, directors, officers or employees in their
capacities as such. Notwithstanding the foregoing, if the CMP Group makes
any oral or written statement which reflects adversely upon the
character, honesty, credit, efficiency or business practices of Dan, it
shall not be deemed a violation of this paragraph (d) for Dan to
communicate publicly in reasonable response thereto."
(g) Section 4.1 shall be amended in its entirety as follows:
"(a) In the event that Dan's employment with the Company terminates by
reason of his Dismissal Without Cause or his Resignation For Good Reason,
the Company shall, in consideration of Dan's compliance with the
restrictive covenants set forth in Article III and in lieu of any other
severance obligations to Dan, provide the following:
(i) The Company shall pay Dan through the period ending on the
earlier of (A) the third anniversary of the date of his termination of
employment or (B) the date Dan attains the age of sixty-five (65) (the
"Severance Period"), an annual amount of $991,561. Payments shall be
made in bi-weekly installments or on such other periodic basis as the
Company then makes salary payments to its employees generally.
(ii) If Dan elects to receive continued healthcare coverage
from the Company pursuant to the provisions of Section 601 et seq. of
ERISA ("COBRA"), the Company shall continue to pay a share of the
applicable premiums for such COBRA coverage so that the cost to Dan
(excluding any tax benefits provided by the Company Code Section 125
premium conversion plan) shall be no greater than the cost to Dan for
healthcare coverage while he was actively employed immediately prior to
his termination of employment. To the extent that the Severance Period
extends beyond the COBRA period and Dan elects to convert to an
individual insurance policy at the end of the COBRA period, the Company
shall pay a portion of the conversion premium through the balance of
the Severance Period so that the net cost to Dan (excluding any tax
benefits provided by the Company Code Section 125 premium conversion
plan) shall be no greater than the cost to Dan for healthcare coverage
while he was actively employed immediately prior to his termination of
employment. The obligation of the Company with respect to healthcare
coverage
<PAGE>
hereunder shall terminate in the event that Dan becomes covered under
the group healthcare plan of another person or entity providing
comparable benefits.
(iii) For a period of six (6) months from the date of Dan's
termination of employment (or from such later date as, at the Company's
request, he continues to have use of the Company's voice-mail and
e-mail systems), (A) Dan may continue to use the mailboxes in the
Company's voice-mail system which were assigned to him during his
employment, and (B) the Company shall cause all e-mails which are sent
to the mailboxes in the Company's e-mail system which were assigned to
him during his employment to be forwarded to such e-mail mailboxes
outside the Company's email systems as he may designate, provided that
he shall promptly forward to such person as the Company may designate
any e-mail communications he receives which relate to the business of
the Company. Dan shall be entitled to retain the Company laptop
computer (including software other than network access software), Palm
Pilot, home fax machine and home printer which he is using as of the
date of his termination of employment, provided that he first gives the
Company access to the laptop computer so that the Company may remove
any Company confidential information resident thereon.
"(b) In addition, the Company shall have the right, but not the
obligation, to require Dan's continued compliance with the restrictive
covenants set forth in Article III for up to two (2) years after the
expiration of the period for which the Company is obligated to pay Dan
under paragraph (a) of this Section 4.1, in consideration of which the
Company shall continue to pay Dan, during the period of time elected by
the Company, on the same basis and in the same manner as set forth in
paragraph (a) of this Section 4.1. Such right shall be exercisable by
the Company by giving Dan written notice of exercise no later than
six 6) months after termination of his employment with the Company."
(h) The definition of "CMP Business" in Article VII shall be amended to read in
its entirety as follows:
"`CMP BUSINESS' shall mean any publication, product or service that, on
the date of the Transaction, (a) the CMP Group publishes, produces or
provides or (b) the CMP Group has a bona fide plan or intention to
publish, produce or provide within the succeeding 12-month period, the
research and development of which the CMP Group has devoted substantive
time and attention to, and which plan or intention Dan has actual
knowledge of
<PAGE>
before he engages in any activity competitive with such CMP Business as
contemplated by clause (A) of Section 3.3(a)."
(i) The definition of "CMP Group" in Article VII shall be amended to read in its
entirety as follows:
"`CMP GROUP' shall mean the Company or any subsidiary in which it holds
a majority interest."
(j) A definition of "Competitive Business" shall be inserted in Article VII to
read in its entirety as follows:
"`COMPETITIVE BUSINESS' shall mean (a) any publication, product or
service that competes directly with a CMP Business or (b) any business
more than 15% of the gross revenue of which is earned from one or more
publications, products or services that compete directly with one or
more CMP Businesses."
(k) The definitions of "Direct Competitor", "Directly Competitive Company",
"Indirect Competitor" and "Indirectly Competitive Company" shall be deleted from
Article VII in their entirety.
Section 3. TERMINATION OF STOCKHOLDERS' AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, and, in connection therewith, Dan sells the restricted shares of
Class A Common Stock which he holds under the Stockholder' Agreement, the
Stockholders' Agreement shall terminate in its entirety immediately upon his
sale of such shares, and no party thereto shall have any further rights or
obligations thereunder. In furtherance but not in limitation of the foregoing,
following his sale of such shares Dan shall not be subject to any pre- or
post-employment covenants under the terms of the Stockholders' Agreement.
<PAGE>
4. EFFECTIVENESS OF AGREEMENT.
This Agreement shall remain in full force and effect until the earlier
of the date on which a Transaction is consummated or the close of business on
March 1, 2000. If a Transaction has not been consummated on or before March 1,
2000, then this Agreement shall be null and void as of its inception, and Dan
and the Company shall have all of their respective rights and obligations under
the Option Agreement and the Employment Agreement as if this Agreement had never
existed.
Section 5. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, representatives, successors and permitted
assigns. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without reference to its
principles regarding choice or conflicts of law. This Agreement shall survive
any merger, sale or other disposition of the Company and shall survive the
termination of Dan's employment with the Company.
<PAGE>
IN WITNESS WHEREOF, Dan has executed this Agreement and the Company has
caused this Agreement to be executed by an officer thereunto duly authorized on
the day and year first above written.
CMP MEDIA INC.
By /s/ Michael S. Leeds /s/ Daniel H. Leeds
------------------------------ ------------------------------
Name: Michael S. Leeds DANIEL H. LEEDS
Title: President & CEO
Attest:
[CORPORATE SEAL]
/s/ Robert D. Marafioti
- -------------------------------
<PAGE>
Exhibit 5
AGREEMENT TO AMEND OPTION AGREEMENT
This Agreement to Amend Option Agreement is made and entered into as of
the 23rd day of April, 1999, by and between CMP MEDIA INC., a Delaware
corporation (the "Company"), and KENNETH D. CRON ("Ken").
WHEREAS, the Company and Ken are parties to an Option
Agreement dated as of November 27, 1996 (the "Option Agreement") under which Ken
has an option to purchase a total of 943,800 shares of Class A Common Stock of
the Company, which option has vested with respect to 47,190 of such shares; and
WHEREAS, the Company is presently exploring strategic alternatives
which may include a merger or sale of the Company resulting in a Change in
Control (as defined in the Option Agreement) (such merger or sale hereinafter
referred to as a "Transaction"); and
WHEREAS, potential parties to a Transaction have indicated that
uncertainty regarding Ken's rights under the Option Agreement following
consummation of a Transaction may present impediments to a proper valuation of
the Company and to a successful consummation of a Transaction; and
WHEREAS, to facilitate the Company's consummation of a Transaction, the
parties have agreed to amend the Option Agreement as set forth herein; and
NOW, THEREFORE, in consideration of the mutual covenants and
<PAGE>
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged by each of the parties,
the parties hereto, intending to be legally bound, hereby covenant and agree as
follows:
Section 1. AMENDMENT OF OPTION AGREEMENT.
In the event that the Company consummates a Transaction on or before
March 1, 2000, the Option Agreement shall be automatically and without further
action of the parties amended, as of the day on which such Transaction is
consummated, by deleting Section 5.4 thereof in its entirety and by substituting
in its place the following:
"Section 5.4. CHANGE IN CONTROL.
"Notwithstanding anything to the contrary contained in
Article III or this Article V, in the event that there is a Change in
Control, every unvested Option shall immediately vest and become
exercisable in accordance with the provisions of Article IV. In the
event that such Change in Control contemplates that substantially all
options to purchase shares of the Company's Class A Common Stock shall
be canceled as of the date such Change in Control is consummated and
the holders of such options shall receive consideration equal to the
difference between the per-share value of the consideration paid to
stockholders of the Company for such Change in Control and the
exercise price of such options, then in exchange for receipt of such
consideration within five (5) days after the consummation of such
Change in Control (i) Ken shall not exercise any Option hereunder on
or after the date of such consummation, and (ii) the Options
outstanding hereunder as of the date of such consummation shall be
canceled."
Section 3. EFFECTIVENESS OF AGREEMENT.
This Agreement shall remain in full force and effect until the earlier
of the date on which a Transaction is consummated or the close of business on
March 1, 2000. If a Transaction has not been consummated on or before March 1,
2000, then this Agreement shall be null and void as of its inception, and Ken
and the
<PAGE>
Company shall have all of their respective rights and obligations under the
Option Agreement as if this Agreement had never existed.
Section 4. MISCELLANEOUS.
This Agreement shall be binding upon and inure to the benefit of the
parties and their respective heirs, representatives, successors and permitted
assigns. This Agreement shall be governed by and construed and enforced in
accordance with the laws of the State of New York, without reference to its
principles regarding choice or conflicts of law. This Agreement shall survive
any merger, sale or other disposition of the Company.
IN WITNESS WHEREOF, Ken has executed this Agreement and the Company has
caused this Agreement to be executed by an officer thereunto duly authorized on
the day and year first above written.
CMP MEDIA INC.
By /s/ Michael S. Leeds /s/ Kenneth D. Cron
--------------------------- -----------------------------
Name: Michael S. Leeds KENNETH D. CRON
Title: President & CEO
<PAGE>
EXHIBIT 6
[CMP MEDIA INC. LETTERHEAD]
May 6, 1999
Dear Stockholders:
I am pleased to inform you that CMP Media Inc. has signed a merger agreement
with Miller Freeman Worldwide plc under which a subsidiary of Miller Freeman
has commenced a tender offer to purchase all of the outstanding CMP shares at
$39.00 per share in cash. The tender offer will be followed by a merger of
the subsidiary into CMP in which each remaining CMP share will be converted
into the right to receive $39.00 in cash.
After careful consideration, your Board of Directors has unanimously approved
the merger agreement, the offer and the merger and determined that the offer
and the merger are fair to, and in the best interests of, CMP's stockholders.
Accordingly, the Board of Directors unanimously recommends that all
stockholders accept the offer and tender their shares pursuant to the offer.
In arriving at its determination and recommendation, the Board of Directors
gave careful consideration to the factors described in the attached Schedule
14D-9, including the opinion of Lazard Freres & Co. LLC, dated April 28,
1999, to the effect that the cash consideration to be received by CMP's
stockholders in the tender offer and the merger is fair, from a financial
point of view, to CMP's stockholders. Additional information with respect to
the Board of Directors' decision is contained in the attached Schedule 14D-9,
and we urge you to consider this information carefully.
In addition to the attached Schedule 14D-9, we also enclose Miller Freeman's
Offer to Purchase, dated May 6, 1999, together with related materials,
including a Letter of Transmittal, to be used for tendering your shares.
These documents set forth the terms and conditions of the offer and the
merger and provide instructions as to how to tender your shares. We urge you
to read the enclosed materials carefully in making your decision with respect
to tendering your shares pursuant to the offer.
The management and directors of CMP thank you for the support you have given
CMP.
Sincerely,
/s/ Michael S. Leeds
Michael S. Leeds
President and Chief Executive Officer
<PAGE>
EXHIBIT 7
[LETTERHEAD OF LAZARD FRERES & CO. LLC]
The Board of Directors April 28, 1999
CMP Media Inc.
600 Community Drive
Manhasset, NY 11030
Dear Members of the Board:
We understand that CMP Media Inc. (the "Company"), United News & Media plc
("United"), Miller Freeman Worldwide plc ("Parent") and MFW Acquisition Corp.,
an affiliate of Parent ("Merger Sub"), have entered into an Agreement and Plan
of Merger (the "Agreement") pursuant to which Merger Sub will commence a tender
offer (the "Offer") to purchase all the issued and outstanding shares of the
Company's Class A common stock, par value $0.01 per share (the "Class A Common
Stock"), and the Company's Class B common stock, par value $0.01 per share (the
"Class B Common Stock" and, collectively with the Class A Common Stock, the
"Common Stock") for $39.00 per share in cash, all as more fully provided in the
Agreement. Pursuant to the Agreement, following consummation of the Offer,
Merger Sub will merge with and into the Company (the "Merger"), and any
remaining outstanding shares of Common Stock (other than Common Stock held by
Parent, Merger Sub or any other affiliate of Parent, shares of Common Stock held
in the treasury of the Company and shares of Common Stock held by stockholders
who demand appraisal for such shares in accordance with the Delaware General
Corporation Law (the "DGCL"), if the DGCL provides for appraisal rights for such
shares in the Merger) will be converted into the right to receive $39.00 in
cash, all as more fully provided in the Agreement. References herein to the
"Consideration" is to the consideration to be received by the holders of the
Common Stock in the Offer and the Merger and references herein to the
"Transaction" is to the Offer and the Merger as contemplated by the Agreement.
You have requested our opinion as to the fairness, from a financial point of
view, to the holders of shares of Common Stock, taken as a whole (other than
Merger Sub, Parent and its affiliates), of the aggregate Consideration to be
paid pursuant to the Transaction.
In connection with this opinion, we have:
(i) Reviewed the financial terms and conditions of the Agreement dated
April 28, 1999;
(ii) Analyzed certain historical business and financial information
relating to the Company;
(iii) Reviewed various financial forecasts and other data provided to us
by the Company relating to its business;
(iv) Held discussions with members of the senior management of the
Company with respect to the business, prospects, and strategic objectives of
the Company;
(v) Reviewed public information with respect to certain other companies
in lines of business we believe to be generally comparable to the business
of the Company;
(vi) Reviewed the financial terms of certain business combinations
involving companies in lines of business we believe to be generally
comparable to those of the Company, and in other industries generally;
(vii) Reviewed the historical stock prices and trading volumes of the
Class A Common Stock; and
(viii) Conducted such other financial studies, analyses and investigations
as we deemed appropriate.
<PAGE>
We have relied upon the accuracy and completeness of the foregoing
information, and have not assumed any responsibility for any independent
verification of such information or any independent valuation or appraisal of
any of the assets or liabilities of the Company, or concerning the solvency or
fair value of the Company. With respect to financial forecasts, we have assumed
that they have been reasonably prepared on bases reflecting the best currently
available estimates and judgments of management of the Company. We assume no
responsibility for and express no view as to such forecasts or the assumptions
on which they are based.
Further, our opinion is necessarily based on economic, monetary, market and
other conditions as in effect on, and the information made available to us as
of, the date hereof. In rendering our opinion, we did not address the Company's
underlying decision to effect the Transaction.
In rendering our opinion, we have assumed that the Transaction will be
consummated on the terms described in the Agreement, without any waiver of any
material terms or conditions by the Company and that obtaining any necessary
regulatory approvals for the Transaction will not have an adverse effect on the
Company.
Lazard Freres & Co. LLC is acting as investment banker to the Company in
connection with the Transaction and will receive a fee for our services, a
substantial portion of which is contingent upon the consummation of the
Transaction. We have in the past provided financial advisory services to the
Company for which we received usual and customary compensation. In addition, the
Company has agreed to indemnify us for certain liabilities that may arise out of
the rendering of this opinion.
Our engagement and the opinion expressed herein are for the benefit of the
Company's Board of Directors and our opinion is rendered to the Company's Board
of Directors in connection with its consideration of the Transaction. This
opinion is not intended to and does not constitute a recommendation to any
holder of Common Stock as to whether such stockholder should vote for the
Transaction or tender their share pursuant to the Offer. It is understood that
this letter may not be disclosed or otherwise referred to without our prior
consent, except as may otherwise be required by law or by a court of competent
jurisdiction.
Based on and subject to the foregoing, we are of the opinion that the
aggregate Consideration to be paid pursuant to the Transaction is fair to the
holders of Common Stock, taken as a whole (other than Parent and its
affiliates), from a financial point of view.
Very truly yours,
LAZARD FRERES & CO. LLC
By: /s/ PETER R. EZERSKY
-----------------------------------------
Peter R. Ezersky
MANAGING DIRECTOR
<PAGE>
London, April 29, 1999
UNITED NEWS & MEDIA PLC (22-1/4, before open) said it had agreed to buy
CMP MEDIA INC (33-7/8, before open) for $39 per share, a total consideration of
$920 mln after deducting cash on hand. United said members of the Leeds family
and related trusts and foundations holding more than 68% of CMP had agreed to
tender their shares. United said the acquisition of CMP, which has titles such
as InformationWeek and which operates leading Internet sites in the high-tech
business-to-business market, will be neutral for its EPS in the first year and
enhance earnings strongly thereafter. The company said in a statement that
investment in CMPNet will create the leading operator of online sites servicing
the hi-tech business market.
